Philip Morris cuts profit forecast as energy costs, currency pressure bite

Philip Morris International trimmed its full-year profit outlook on Tuesday as higher energy costs tied to the Iran conflict, currency swings and a more competitive consumer market squeezed margins at one of the world’s dominant tobacco companies.

Chief Executive Jacek Olczak delivered the warning in Paris at Deutsche Bank’s global consumer conference, where the company said it expected broad smoke-free momentum to continue, led by IQOS. But the numbers pointed to a more complicated picture: Philip Morris now sees 2026 adjusted earnings per share of $8.31 to $8.46, up 10.2 percent to 12.2 percent from 2025, yet both the midpoint and the top of that range sit below its prior forecast. Analysts had been looking for about $8.41 a share.

The company also cut its reported diluted EPS forecast to $7.18 to $7.33, citing currency effects and a non-cash impairment. Philip Morris said the revised guidance also implies 7.5 percent to 9.5 percent adjusted EPS growth excluding a favorable $0.20-per-share currency effect, underscoring how much of the earnings pressure is coming from factors outside its core brands.

Olczak’s message was that price increases are no longer landing cleanly across the category. That matters for tobacco and nicotine companies because their business model depends on passing along higher input costs without losing smokers or pouch users to cheaper rivals. Philip Morris is trying to defend that margin structure with its smoke-free portfolio, which includes IQOS heated tobacco, vapes and oral nicotine pouches.

The clearest example is ZYN. Philip Morris said ZYN ULTRA will launch this month in 9mg and 11mg moist variants in a 20-pouch can, priced below the flagship 15-pouch dry format. The company said the lower list price is meant to optimize ZYN’s price premium, a sign that even a fast-growing nicotine brand has to flex on price to stay competitive.

The pressure is also showing up in Japan. Philip Morris said the April 1 excise-tax increase affected April offtake through consumer pantry de-loading, even though IQOS held a strong category share. That reinforces a broader point for the nicotine market: regulatory shifts can change buying patterns quickly, but they do not automatically create pricing power for manufacturers.

Philip Morris had already lowered guidance in April. In first-quarter results on April 22, it reported adjusted diluted EPS of $1.96, up 16.0 percent, and net revenues of $10.1 billion, up 9.1 percent. Smoke-free products accounted for 43 percent of net revenues across 108 markets, and IQOS held about 77 percent volume share in heat-not-burn. In markets where IQOS is present, the company said it had overtaken Marlboro to become its No. 1 nicotine brand.

Regulatory relief has helped at the margin. The U.S. Food and Drug Administration authorized 20 ZYN nicotine pouch products in January 2025, and in May it laid out enforcement priorities for unauthorized ENDS and nicotine pouch products. Even so, Philip Morris said it expects about a $500 million non-cash impairment charge in the second quarter tied to RBH in Canada. The stock fell about 1 percent before the bell, a sign investors were focused less on smoke-free growth than on the limits of passing costs through to consumers.