Philip Morris International: How Important Is The Growth & Capacity Expansion Of ZYN And Its IQOS Innovation For The Future Of The Company?

Philip Morris International delivered a strong start to the year with double-digit growth in organic net revenue, operating income, and adjusted diluted EPS, both in constant currency and dollar terms. The company’s smoke-free business was a key growth driver, contributing 44% of total gross profit, supported by shipment volume growth of 14.4% and organic net revenue growth of 20%. Within this segment, ZYN shipment volumes grew by 53%, surpassing expectations due to strong demand and increased production capacity, while IQOS demonstrated near 10% HTU adjusted IMS growth despite facing regulatory challenges like the EU flavor ban. VEEV also experienced strong pod growth, particularly in Europe. The combustible business showed positive volume growth and strong pricing, although the geographic mix had a negative impact, particularly with higher growth in lower-margin markets such as Turkey and Egypt. Margin expansion was a highlight, with a 240 basis points organic gross margin improvement and a 250 basis points adjusted operating income margin expansion, driven mainly by the high gross margin of smoke-free products exceeding 70%.