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PM · Q2 2026
Archived report (Q2 2026). Latest deep dive →
The quarter in brief
A strong operating quarter — revenue past $11bn for the first time and operating income up 22% on smoke-free/IQOS pricing and mix strength — was masked at the bottom line by a $511M non-cash RBH equity impairment that drove reported net income and EPS down y/y despite record core profitability.
Net Income
$2,817M
down 7.3% y/y
Net Revenues
$11,192M
up 10.4% y/y
Operating Income
$4,530M
up 22.0% y/y
Gross Profit
$7,659M
up 11.5% y/y
All figures in $M.
| Line item | Amount and change |
|---|---|
| Int'l Smoke-Free | $3,877 · +14.2% |
| Int'l Combustibles | $6,459 · +9.8% |
| U.S. Segment | $856 · −0.7% |
| Net Revenues | $11,192 · +10.4% · first time above $11bn |
| Cost of Sales | $3,533 · +7.9% |
| Gross Profit | $7,659 · +11.5% · 68.5% adj. margin |
| Marketing, Admin & R&D + Corp. | $3,129 · +5.0% |
| Operating Income | $4,530 · +22.0% · 42.6% adj. OI margin |
| RBH Impairment & Net Financing | $238 · incl. $511M non-cash* RBH charge |
| Pretax Income | $4,292 |
| Income Tax | $1,475 |
| Net Income | $2,817 · −7.3% · Diluted EPS $1.80 · −7.7% |
Verdict: a strong operating quarter — revenue past $11bn for the first time and operating income up 22% on smoke-free/IQOS pricing and mix strength — was masked at the bottom line by a $511M non-cash RBH equity impairment that drove reported net income and EPS down y/y despite record core profitability.
FY26 guidance: organic net revenue growth 5-7%, organic operating income growth 7-9%, OCF ≈$13.5bn, capex $1.4-1.6bn, no share repurchases, adjusted diluted EPS $8.26-$8.41.
Source and notation
* marks non-cash / ≈ estimated. Source: Philip Morris International press release / 10-Q (SEC EDGAR).
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Chart: “PM Q2 2026: where the revenue went” by Who Reports Today, https://whoreportstoday.com/t/pm/q2-2026. Licensed under CC BY 4.0.
<figure> <a href="https://whoreportstoday.com/t/pm/q2-2026"><img src="https://whoreportstoday.com/t/pm/q2-2026/sankey.png" alt="PM Q2 2026: where the revenue went" loading="lazy" style="max-width:100%;height:auto"></a> <figcaption>Source: <a href="https://whoreportstoday.com/t/pm/q2-2026">Who Reports Today</a>, licensed under <a href="https://creativecommons.org/licenses/by/4.0/">CC BY 4.0</a></figcaption> </figure>
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<a href="https://whoreportstoday.com/t/pm/q2-2026">PM Q2 2026 earnings chart (Who Reports Today)</a>
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- Reported diluted EPS fell 7.7% to $1.80 while adjusted diluted EPS grew 15.2% to $2.20 — the gap driven mainly by a $511M non-cash* impairment of the deconsolidated RBH (Canada) equity investment (33¢/share).
- International Smoke-Free (~42% of net revenues) grew net revenue 14.2% and gross profit 17.1%, led by IQOS/HTU pricing and volume, the clear profit engine of the quarter.
- International Combustibles delivered an exceptional 10.0% pricing quarter, offsetting adverse geographic mix, with net revenue +9.8% and gross profit +11.5%.
- US segment net revenue declined 0.7% (gross profit -9.2%) on ZYN phasing, cigar declines and Wellness timing, despite FDA MRTP authorization for 20 ZYN variants and the June launch of ZYN ULTRA.
- Operating income growth (22.0%) outpaced revenue growth partly because 2025 included a $41M goodwill impairment and higher adjustment items, flattering the y/y comparison versus the 10.7% organic OI growth.
- Below-the-line items (net financing costs plus the RBH impairment) swung PBT/net income lower even as core operating performance strengthened, illustrating a wide GAAP-vs-adjusted divergence this quarter.
What distorts the picture in this report and what to watch beyond the headlines.
PM — Philip Morris International manufactures and sells tobacco products, primarily cigarettes, outside the United States.
The company is headquartered in New York City and has been expanding its portfolio of smoke-free products in recent years.
Heads-up
- net income fell 7% y/y in Q2 2026
Most likely because international Combustibles delivered an exceptional 10.0% pricing quarter, offsetting adverse geographic mix; US segment net revenue declined 0.7% (gross profit -9.2%) on ZYN phasing, cigar declines and Wellness timing. Based on the Q2 2026 report.
Company filings on SEC EDGAR ↗More reports: SJM · Q1 FY2027 · STZ · Q2 FY2027 · SYY · Q4 FY2026 · TGT · Q2 2026 · TSN · Q3 FY2026 · WMT · Q2 FY2027 · ADM · Q2 2026 · BF.B · Q1 FY2027 · BG · Q2 2026 · CASY · Q1 FY2027 · all reports