AI interpretation based on checked source excerpts. Issuer assertions and evidence limitations remain explicit.
Policy quality-scores-2: six equally weighted categories. The overall score requires full coverage. Missing inputs are not zero. Qualitative grades are sourced interpretations, not probabilities. 5/6 · 18/10/2026
Moat56
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
structural advantage · 3/4 · Protected principal brands are supported by realized pricing, stable cigarette category share and Marlboro share gains. These outcomes demonstrate commercially valuable differentiation without establishing superiority across all product categories.
durability · 2/4 · Existing brands and pricing support persistence, but cigarette consumption is contracting and first-half oral-product shipments declined. Conditional authorizations and the historical IQOS prohibition limit confidence in long-term protection.
customer dependency · 2/4 · Stable category share and Marlboro gains indicate repeat demand indirectly. No contractual dependency or material switching friction is demonstrated, and declining cigarette and oral shipments show that demand is not captive.
erosion resilience · 2/4 · Combustibles pricing more than offset unfavorable volume/mix, while smoke-free shipments grew overall. Oral-product declines and U.S. gross-profit deterioration demonstrate uneven resilience; competitive and regulatory risks remain prospective except where actual restrictions are disclosed.
Pricing power56
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
realized pricing · 3/4 · First-half international combustibles pricing more than offset unfavorable volume/mix, and consolidated second-quarter organic growth also benefited from pricing. These are observed revenue outcomes, although they do not establish equal pricing strength in smoke-free products.
retention · 2/4 · Stable cigarette share and Marlboro gains alongside favorable pricing support demand resilience indirectly. First-half cigarette and oral shipment declines temper the assessment; no customer retention rate is disclosed.
margin resilience · 3/4 · First-half consolidated gross profit and operating income grew faster than revenue, and international combustibles achieved organic gross-profit growth despite adverse volume/mix. U.S. second-quarter gross-profit deterioration qualifies this strength. Profitability supports pricing resilience, not a standalone moat inference.
contractual freedom · 1/4 · Certain markets require governmental approval for price changes, a disclosed constraint on pricing discretion. Realized favorable pricing demonstrates practical flexibility elsewhere, but unrestricted contractual authority is not established.
Predictability98
Five consecutive annual periods. Equal weights: nondeclining revenue frequency; revenue-growth volatility (5–40pp); positive FCF frequency; FCF-margin volatility (3–20pp). Stability indicator, not a growth forecast.
- Nondeclining revenue years (%)
- 100.00
- Revenue growth volatility (pp)
- 3.49
- Positive FCF years (%)
- 100.00
- FCF margin volatility (pp)
- 4.44
Financial strength46
Equal-weight grades: debt/FCF (1–8x), net debt/earnings before interest and tax (0–5x), interest service (1–12x), current ratio (0.75–2x). Earnings use reported operating income, or reported pretax profit plus reported interest expense when operating income is unavailable. Interest service uses earnings/interest expense; if unavailable, it uses reported operating cash flow/cash interest paid, without relabeling cash paid as accrued expense. Nonpositive cash flow/earnings score 0 for their service component; reported zero interest with a positive numerator scores 100. Net cash scores 100 for net leverage. Missing disclosures remain unavailable. General nonfinancial-company rubric, not a credit rating; exceptional and nonoperating gains are not normalized out. IFRS finance-cost and cash-flow classifications retain their reported scope.
- debtFcfGrade
- 48.87
- netDebtEbitGrade
- 40.96
- interestCoverageGrade
- 76.22
- currentRatioGrade
- 16.65
- Debt / FCF (x)
- 4.58
- Net debt / operating income (x)
- 2.95
- Interest coverage (x)
- 9.38
- Current ratio (x)
- 0.96
Capital allocation—
Missing required inputs: sbcRevenue. Three-year equal-weight indicators: pretax return on average invested capital (0–25%; equity + debt − cash, each year and its prior year), share-count growth (0–5%, lower better), share-based cost/revenue (2–20%, lower better), consolidated FCF/net income (0–1x). Return uses reported operating income or, if unavailable, EBIT calculated from reported pretax profit plus reported interest expense; exceptional/nonoperating gains are not normalized out. Share-based cost uses the reported cash-flow add-back or, if absent, separately reported recognized compensation expense; the latter never becomes an FCF adjustment. Nonpositive net income scores 0 for cash conversion; absent income/FCF stays unavailable. Nonpositive invested capital has no defined return and remains unavailable. Does not establish acquisition quality or buyback timing.
- 3-year pre-tax operating return (%)
- 39.20
- 3-year average dilution (%)
- 0.13
- cashConversionGrade
- 100.00
Management69
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
capital discipline · 2/4 · Actual 2025 operating cash flow exceeded target; subsequent financing included higher long-term debt repayments and unused committed facilities. Substantial debt, increased short-term borrowing, dividends exceeding attributable earnings in 2023–2024, stock-award issuance and the realized RBH impairment make the record mixed. The impairment alone does not establish management culpability.
incentive alignment · 3/4 · Actual equity arrangements combine performance-based and time-based awards; 2025 PSUs link compensation to relative and absolute shareholder returns, earnings growth and sustainability over a typically three-year cycle. Director share-retention rules add alignment. Executive ownership and realized long-term payout quality are not established.
execution · 3/4 · Reported 2025 adjusted revenue and operating-income growth met stated targets, while actual operating cash flow exceeded target. First-half 2026 operating-income and smoke-free shipment growth provide further operating evidence. Execution is inferred from outcomes; oral-product weakness and the RBH impairment prevent an exceptional assessment.
governance · 3/4 · Disclosed arrangements include a predominantly independent board, independent standing committees except Science and Technology, annual elections and majority voting in uncontested elections. These are substantive governance provisions, though their effectiveness is not proven by disclosure alone and independent directors have no term or retirement limits.
Evidence
We own the trademark rights to all of our principal brands, including Marlboro (outside of the U.S.), HEETS, IQOS, IQOS ILUMA, TEREA, VEEV and ZYN, or have the right to use them in all countries in which these brands are advertised or sold.
Item 1 — Intellectual Property: principal-brand trademark rights · Filed 06/02/2026
Our patent portfolio, as a whole, is material to our business.
Item 1 — Intellectual Property: patent portfolio materiality · Filed 06/02/2026
Net revenues, excluding currency and acquisitions/divestitures, increased by 3.8%, reflecting: an unfavorable volume/mix; more than offset by a favorable pricing variance.
International Combustibles — first-half 2026 pricing and volume/mix · Filed 24/07/2026
Our cigarette category volume share stood at 25.3% (flat versus the prior year) despite adverse market mix.
International Combustibles — second-quarter 2026 cigarette category share · Filed 24/07/2026
Marlboro continued to gain share (up by 0.3 percentage points) matching its record category share of 11.0%.
International Combustibles — second-quarter 2026 Marlboro share · Filed 24/07/2026
Net revenues, excluding currency and acquisitions/divestitures, increased by 7.6%, mainly reflecting: a favorable pricing variance mainly driven by international combustibles; supported by favorable volume/mix, driven by international smoke-free volumes, notwithstanding adverse international combustibles mix.
Consolidated Operating Results — second-quarter 2026 organic revenue drivers · Filed 24/07/2026
Competitors in our industry include Altria Group, Inc., British American Tobacco plc, Japan Tobacco Inc., Imperial Brands plc, new market entrants, particularly with respect to innovative products, several regional and local tobacco companies and, in some instances, state-owned tobacco enterprises, principally in Algeria, Egypt, China, Taiwan, Thailand and Vietnam.
Item 1 — Competition: named industry competitors · Filed 06/02/2026
Consumption of tax-paid cigarettes continues to decline in many of our markets.
Risk Factors — declining tax-paid cigarette consumption · Filed 06/02/2026
50 Table of Contents Total Shipment Volume Our shipment volume for cigarettes and smoke-free products is shown in the table below: Shipment Volume (equivalent units in billions) For the Six Months Ended June 30, 2026 2025 Change Total 389.4 387.9 0.4 % Cigarettes 294.2 300.0 (1.9) % Smoke-Free Products 95.2 87.9 8.3 % HTU 83.1 75.9 9.4 % Oral SFP 9.6 10.5 (8.8) % E-vapor 2.6 1.5 72.0 % Note: Amounts may not foot due to rounding.
Consolidated Operating Results — first-half 2026 product shipment volumes · Filed 24/07/2026
In certain markets, we are dependent on governmental approvals of various actions such as price changes, and failure to obtain such approvals could impair growth of our profitability.
Risk Factors — governmental approval of price changes · Filed 06/02/2026
The competitive environment and our competitive position can be significantly influenced by weak economic conditions; erosion of consumer confidence; competitors' introduction of lower-price products or innovative products; adult smoker willingness to convert to our SFPs; higher product taxes; higher absolute prices and larger gaps between retail price categories; unfair competition; more effective adoption of artificial intelligence tools and processes by our competitors; and product regulation that diminishes the ability to differentiate products, restricts adult consumer access to truthful and non-misleading information about our SFPs, or disproportionately impacts the commercialization of our products in relation to our competitors.
Risk Factors — competitive pricing, innovation and differentiation constraints · Filed 24/07/2026
Prior to their rescission, the orders prohibited the importation and sales of imported IQOS products to the United States of America.
IQOS products sourcing for the U.S. market — prior import and sales prohibition · Filed 06/02/2026
(“BAT”). In accordance with its terms, the parties to the Settlement Agreement filed a joint motion to rescind the limited exclusion order and the cease-and-desist order issued by the International Trade Commission (“ITC”) on September 29, 2021, which was granted on March 11, 2024.
IQOS products sourcing for the U.S. market — March 2024 rescission of orders · Filed 06/02/2026
In addition, our revenues may be materially adversely affected by counterfeiting, contraband, cross-border purchases, non-tax-paid volume produced by local manufacturers and other non-compliant or illicit cigarettes or smoke-free products.
Risk Factors — illicit and non-compliant product competition · Filed 24/07/2026
and Subsidiaries Condensed Consolidated Statements of Earnings (in millions of dollars, except per share data) (Unaudited) For the Six Months Ended June 30, 2026 2025 Net revenues 1 & 2 (Note 13) $ 21,338 $ 19,441 Cost of sales (Note 1) 6,774 6,305 Gross profit 14,564 13,136 Marketing, administration and research costs (Notes 1 & 15) 5,838 5,416 Impairment of goodwill (Note 5) — 41 Corporate expenses and other (Note 1) 303 423 Operating income 8,423 7,256 Interest expense, net 480 518 Pension and other employee benefit (income) costs (Note 4) (10) 23 Earnings before income taxes 7,953 6,715 Provision for income taxes 1,631 1,311 Impairment related to the RBH equity investment (Note 13) 511 — Equity investments and securities (income)/loss, net (Note 13) 244 (581) Net earnings $ 5,567 $ 5,985 Net earnings attributable to noncontrolling interests 312 256 Net earnings attributable to PMI $ 5,255 $ 5,729 Per share data (Note 7): Basic earnings per share $ 3.36 $ 3.67 Diluted earnings per share $ 3.36 $ 3.67 (1) Includes net revenues from related parties of $2,440 million and $2,080 million for the six months ended June 30, 2026 and 2025, respectively.
Condensed Consolidated Statements of Earnings — six months ended June 30, 2026 and 2025 · Filed 24/07/2026
Gross profit increased by 10.7%. Gross profit, excluding currency and acquisitions/divestitures, increased by 6.1%, due to the same factors as for net revenues.
International Combustibles — first-half 2026 gross-profit growth · Filed 24/07/2026
/ Div. Price Vol/Mix/Other Cost (in millions) Net Revenues $ 856 $ 862 (0.7) % (0.9) % $ (6) $ 1 $ — $ 15 $ (23) $ — Gross Profit $ 555 $ 611 (9.2) % (9.0) % $ (56) $ (1) $ — $ 15 $ (24) $ (47) During the quarter, net revenues decreased by 0.7%.
U.S. Segment — second-quarter 2026 revenue and gross-profit bridge · Filed 24/07/2026
Operating Cash Flow: Operating cash flow of $12.2 billion exceeded our target of $10.6 to $11.1 billion.
Compensation Discussion and Analysis — actual 2025 operating cash flow versus target · Filed 26/03/2026
87 Aggregate maturities: Aggregate maturities of long-term debt are as follows: (in millions) 2026 $ 3,540 2027 6,816 2028 4,968 2029 4,968 2030 5,903 2031-2035 14,199 2036-2040 3,561 Thereafter 5,050 49,005 Debt discounts and fair value adjustments (338) Total long-term debt $ 48,667 Revolving Credit Facilities At December 31, 2025, PMI’s total committed revolving credit facilities were as follows: Type (in billions) Committed Revolving Credit Facilities Multi-year $2.0 billion revolving credit, expiring February 10, 2026 (1) $ 2.0 Multi-year $2.5 billion revolving credit, expiring September 29, 2026 (2) (3) 2.5 Multi-year €1.5 billion revolving credit, expiring January 29, 2028 1.8 Total facilities $ 6.3 (1) On January 28, 2022, PMI entered into an agreement, effective February 10, 2022, to amend and extend the term of its $2.0 billion multiyear revolving credit facility, for an additional year covering the period February 11, 2026 to February 10, 2027, in the amount of $1.9 billion.
Debt note — year-end 2025 long-term debt and maturity schedule · Filed 06/02/2026
At June 30, 2026, there were no borrowings under these committed revolving credit facilities, and the entire committed amounts were available for borrowing.
Revolving Credit Facilities — unused committed facilities at June 30, 2026 · Filed 24/07/2026
The increase in net cash used was primarily due to lower long-term debt issuances in 2026, higher long-term debt repayments in 2026 and higher dividend payments.
Financing Activities — lower debt issuance, higher repayments and dividends · Filed 24/07/2026
The increase was partially offset by higher net short-term borrowings in 2026 and changes in the cash collateral received for derivative instruments, reflecting the depreciation of the Euro and the Swiss franc versus the U.S.
Financing Activities — increased short-term borrowing and collateral movements · Filed 24/07/2026
We recorded an impairment charge of $511 million related to our RBH equity investment in the condensed consolidated statement of earnings for the three months ended June 30, 2026.
Operating Results — realized RBH investment impairment · Filed 24/07/2026
71 Consolidated Statements of Stockholders' (Deficit) Equity (in millions of dollars, except per share data) PMI Stockholders’ (Deficit) Equity Common Stock Additional Paid-in Capital Earnings Reinvested in the Business Accumulated Other Comprehensive Losses Cost of Repurchased Stock Noncontrolling Interests Total Balances, January 1, 2023 $ — $ 2,230 $ 34,289 $ (9,559) $ (35,917) $ 2,646 $ (6,311) Net earnings 7,813 455 8,268 Other comprehensive earnings (losses), net of income taxes (2,436) 6 (2,430) Issuance of stock awards (Note 8) 61 132 193 Dividends declared ($5.14 per share) (8,012) (8,012) Dividends paid to noncontrolling interests (497) (497) Sale (purchases) of subsidiary shares to/(from) noncontrolling interests (6) 180 (831) (657) Balances, December 31, 2023 — 2,285 34,090 (11,815) (35,785) 1,779 (9,446) Net earnings 7,057 446 7,503 Other comprehensive earnings (losses), net of income taxes 501 (101) 400 Issuance of stock awards (Note 8) 50 145 195 Dividends declared ($5.30 per share) (8,278) (8,278) Dividends paid to noncontrolling interests (494) (494) Acquisitions (Note 3) 160 160 Sale (purchases) of subsidiary shares to/(from) noncontrolling interests 90 90 Balances, December 31, 2024 — 2,335 32,869 (11,314) (35,640) 1,880 (9,870) Net earnings 11,348 500 11,848 Other comprehensive earnings (losses), net of income taxes (982) (3) (985) Issuance of stock awards (Note 8) 119 89 208 Dividends declared ($5.64 per share) (8,817) (8,817) Dividends paid to noncontrolling interests (430) (430) Sale (purchase) of subsidiary shares to/(from) noncontrolling interests (1) 19 18 Balances, December 31, 2025 $ — $ 2,453 $ 35,400 $ (12,296) $ (35,551) $ 1,966 $ (8,028) See notes to consolidated financial statements.
Consolidated Statements of Stockholders' Equity — earnings, dividends and stock awards · Filed 06/02/2026
The PSU awards require the achievement of certain performance metrics, which are predetermined at the time of grant, typically over a three-year performance cycle.
Share-Based Compensation — PSU performance-cycle requirements · Filed 06/02/2026
The performance metrics for such PSU's granted during 2025 consisted of PMI's Total Shareholder Return ("TSR") relative to a predetermined peer group and on an absolute basis (40% weight), PMI’s currency-neutral compound annual adjusted diluted earnings per share growth rate (30% weight), and a Sustainability Index, which consists of two drivers: •Product Sustainability (20% weight): aggregates key performance indicators pertaining to social and environmental impacts generated by PMI's products; measuring progress primarily on PMI's efforts to maximize the benefits of smoke-free products, purposefully phase out cigarettes, and reduce post-consumer waste; and •Operational Sustainability (10% weight): aggregates key performance indicators pertaining to social and environmental impacts generated by PMI's business activities; measuring progress on PMI's efforts to benefit PMI and its stakeholders by tackling climate change, preserving nature, improving the quality of life of people in its supply chain, and fostering an empowered, and inclusive workplace.
Share-Based Compensation — metrics for PSUs granted during 2025 · Filed 06/02/2026
The Compensation Committee grants the individual 60% of the award opportunity in the form of performance-based PSUs, and 40% in the form of time-based RSUs.
Compensation Discussion and Analysis — performance-based and time-based equity allocation · Filed 26/03/2026
Director Share Retention Requirement An independent director may not sell or otherwise dispose of shares received pursuant to the annual share award (other than shares withheld from the grant to pay taxes) unless he or she continues after the disposition to own shares having an aggregate value of at least five times the then-current annual cash retainer (see page 30).
Governance Practices — director share retention requirement · Filed 26/03/2026
Adjusted Net Revenues*: Adjusted Net revenues of $40.6 billion grew by 6.5% compared to 2024, on an organic basis, meeting our target of 6.5% to 7.5%.
Compensation Discussion and Analysis — actual 2025 organic adjusted revenue growth versus target · Filed 26/03/2026
Adjusted OI*: Adjusted OI of $16.4 billion grew by 10.6% on an organic basis, meeting our target of 10.5% to 12.0%.
Compensation Discussion and Analysis — actual 2025 organic adjusted operating-income growth versus target · Filed 26/03/2026
All directors other than our Chairman and Group CEO PMI are independent.
Governance Practices — current director independence · Filed 26/03/2026
All standing Committees, other than the Science and Technology Committee, are comprised only of independent directors.
Governance Practices — standing-committee independence and exception · Filed 26/03/2026
Annual Election of Directors All directors are elected annually by the Company’s shareholders (see page 17).
Governance Practices — annual director elections · Filed 26/03/2026
Majority Voting Standard for Directors The Company’s by-laws provide that, in uncontested elections, directors shall be elected by a majority rather than by a plurality vote (see page 19).
Governance Practices — majority voting in uncontested elections · Filed 26/03/2026
Director Term and Retirement There are no term limits or a retirement age for independent directors.
Governance Practices — absence of independent-director term or retirement limits · Filed 26/03/2026
These authorizations are subject to strict marketing, reporting, and other requirements, and are not a guarantee that the product will remain authorized, particularly if there is a significant uptake in underage or non-smoker initiation.
U.S. regulatory discussion — conditions and revocability of FDA authorizations · Filed 24/07/2026
From time to time, PMI’s shipment volumes and IMS are subject to the impact of distributor inventory movements (or wholesaler inventory movements in certain markets where PMI does not sell to distributors), and estimated total industry/market volumes are subject to the impact of inventory movements in various trade channels that include estimated trade inventory movements of PMI’s competitors arising from market-specific factors that significantly distort reported volume disclosures.
Operating Results — inventory effects on shipment and market-volume measures · Filed 24/07/2026
