Executive Summary
Philip Morris International (PMI) delivered a solid QQ2 2025 with revenue of USD 10.14 billion, up 7.1% year over year and 9.63% quarter over quarter, underscoring favorable pricing and mix outside the U.S. Gross profit reached USD 6.861B, yielding a robust gross margin of ~67.7%, while operating income of USD 3.753B produced an operating margin of ~37.0%. Net income of USD 3.031B and earnings per share (EPS) of USD 1.95 reflect strong profitability against a backdrop of ongoing investment in smokefree product expansion and geographic diversification. Free cash flow (FCF) amounted to USD 3.056B, supported by operating cash flow (CFO) of USD 3.412B and capital expenditures of USD 0.356B, signaling healthy cash generation that funds a substantial dividend and deleveraging considerations moving forward.
On the balance sheet, PMI exhibits a high absolute debt load (total debt USD 51.462B) and negative stockholders’ equity (USD -11.966B), with net debt around USD 47.286B. This reflects sizable leverage and equity position challenges, even as liquidity metrics remain modestly stretched (current ratio ~0.83, quick ratio ~0.45, cash ratio ~0.15). The company’s working capital profile shows a long operating cycle, highlighted by a high inventory turn exception (days of inventory outstanding ~294 days) and extended receivables/payables dynamics. The combination of strong FCF and elevated leverage implies a strategic choice: to recycle cash into dividends, debt reduction opportunities, and potential investments in smokefree products and geographic expansion, while managing regulatory and currency headwinds.
Management commentary is not captured in the provided transcript data, so the forward-looking stance and thematic guidance from the QQ2 call cannot be quoted directly here. Nonetheless, the underlying metrics suggest PMI remains focused on pricing power, product mix optimization, and expanding smokefree platforms outside the U.S., against a backdrop of ongoing global regulatory uncertainty and currency volatility.
Key Performance Indicators
Key Insights
Revenue: USD 10.14B; YoY +7.10%, QoQ +9.63%.
Gross Profit: USD 6.861B; YoY +12.05%, QoQ +14.96%; Gross Margin ~67.66%.
Operating Income: USD 3.753B; YoY +8.97%, QoQ -0.58%; Operating Margin ~37.01%.
Net Income: USD 3.031B; YoY +25.98%, QoQ +13.01%; Net Margin ~29.89%.
EPS: USD 1.95; YoY +26.62%, QoQ +13.37%.
EBITDA: USD 4.191B; EBITDA Margin (EBITDA/Revenue) ~41.3% (reported EBITDARatio ~36.5%).
Free Cash Flow: USD 3.056B; CFO: USD 3.412B; Capital Expenditures: USD 0.356B; FCF per share: USD 1.9...
Financial Highlights
Revenue: USD 10.14B; YoY +7.10%, QoQ +9.63%.
Gross Profit: USD 6.861B; YoY +12.05%, QoQ +14.96%; Gross Margin ~67.66%.
Operating Income: USD 3.753B; YoY +8.97%, QoQ -0.58%; Operating Margin ~37.01%.
Net Income: USD 3.031B; YoY +25.98%, QoQ +13.01%; Net Margin ~29.89%.
EPS: USD 1.95; YoY +26.62%, QoQ +13.37%.
EBITDA: USD 4.191B; EBITDA Margin (EBITDA/Revenue) ~41.3% (reported EBITDARatio ~36.5%).
Free Cash Flow: USD 3.056B; CFO: USD 3.412B; Capital Expenditures: USD 0.356B; FCF per share: USD 1.963.
Cash Flow & Liquidity: Net change in cash -USD 0.30B; Cash at end of period USD 4.176B; Cash from operations USD 3.412B; Current assets USD 23.364B; Total assets USD 68.506B; Total liabilities USD 78.518B; Equity USD -11.966B (negative equity).
Balance Sheet Health: Total debt USD 51.462B; Net debt USD 47.286B; Interest coverage ~13.55x; Current ratio 0.83; Quick ratio 0.45; Inventory USD 10.728B; Inventory Days ~294; Receivables Days ~52; Payables Days ~106.
Key Ratios: P/E ~23.39x; P/S ~27.97x; P/FCF ~92.79x; Dividend Payout ~69.5%.
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
10.14B |
7.10% |
9.63% |
| Gross Profit |
6.86B |
12.05% |
14.96% |
| Operating Income |
3.75B |
8.97% |
-0.58% |
| Net Income |
3.03B |
25.98% |
13.01% |
| EPS |
1.95 |
26.62% |
13.37% |
Key Financial Ratios
operatingProfitMargin
37%
operatingCashFlowPerShare
$2.19
freeCashFlowPerShare
$1.96
dividendPayoutRatio
69.5%
Management Commentary
No earnings call transcript data provided in the dataset. Consequently, management quotes and theme-based highlights could not be extracted. If transcript material becomes available, the highlights would be organized by themes such as strategy (smokefree portfolio expansion and geographic diversification), operations (pricing realization and cost discipline), market conditions (regulatory and currency dynamics), and capital allocation (dividend policy and balance sheet management).
Forward Guidance
No explicit forward guidance is included in the provided data. Given PMI’s positioning, the likely drivers of future performance include: (1) continued pricing power and mix shift toward smokefree products and HEETS outside the U.S.; (2) currency fluctuations impacting reported results; (3) regulatory changes and taxation in key markets that could influence demand and product mix; (4) capital allocation choices between dividends, debt reduction, and potential strategic investments. The absence of formal guidance suggests investors should monitor: pricing realization, volume/mix trends in smokefree versus combustible products, currency headwinds, regulatory developments, and the pace of debt reduction versus dividend coverage.