Philip Morris International

NYSE: PM · USD

Philip Morris International (PM) Economic Moat Analysis56

Competitive advantages, dated evidence and erosion risks.

Narrow economic moat

PMI has an evidenced brand-based moat: trademark rights, resilient cigarette share and realized pricing support commercially valuable differentiation. Third-quarter 2026 pricing and smoke-free demand strengthen that conclusion, but do not establish a wide moat. ZYN's quarterly recovery coexists with year-to-date shipment and U.S. profit declines, while regulatory constraints and historical patent-related exclusion limit durability. Smoke-free authorizations and proprietary products add protection, but their long-term competitive advantage remains less demonstrated than the cigarette franchise.

Intangible assets

Protected brands support differentiation and realized pricing, most clearly in international combustibles. Stable cigarette category share and Marlboro share gains provide operating evidence beyond management's description of brand value. Smoke-free growth supports an emerging extension of this advantage, without proving equivalent strength across categories.

Durability: Trademark rights and demonstrated demand support persistence, but the supplied evidence supports a narrow moat rather than exceptional long-term protection. Regulatory authorizations are conditional, and patents have also exposed PMI to competing intellectual-property rights.
Competitors: Altria Group, Inc., British American Tobacco plc, Japan Tobacco Inc., Imperial Brands plc
Erosion risks: Cigarette contraction, cheaper or innovative competing products, restrictions on differentiation and price changes, and uneven ZYN demand can erode brand economics. Third-quarter U.S. pricing benefited from comparisons with prior-year promotions; planned packaging changes do not establish future pricing strength.
What would invalidate the thesis: The thesis would weaken materially if repeated comparable periods showed cigarette share losses alongside pricing that no longer offsets adverse volume/mix; if smoke-free demand weakened after inventory adjustments; or if restrictions or intellectual-property disputes materially prevented commercialization. Sustained U.S. demand and profit deterioration despite increased investment would undermine the proposed smoke-free extension.

Evidence (8) · Counterevidence (10)

Changes since the previous analysis

Retain the narrow verdict after incorporating the October 21 and October 23, 2026 filings. Third-quarter combustibles pricing and smoke-free adjusted IMS reinforce the demonstrated brand advantage.
Update oral-product erosion: third-quarter ZYN shipments recovered and estimated category share improved between June and September, but nine-month U.S. ZYN shipments, revenue and profitability remained weaker.
Retain the previous moat and pricing grades after reassessment. Third-quarter margin improvement does not erase year-to-date U.S. weakness, and promotional comparisons limit interpretation of U.S. pricing.
Reduce incentive_alignment from 3 to 2: existing performance awards and ownership requirements provide alignment, but the approved CFO separation agreement provides conditional future acceleration of outstanding equity. This is a contractual commitment, not evidence that vesting has occurred.
Retain capital_discipline, execution and governance grades after reviewing current cash flows, operating results and actual governance provisions.

Evidence limitations

The evidence consists of issuer filings and issuer-reported operating results. Named competitors are established, but comparable competitor pricing, costs, customer outcomes and market-share histories are absent.
Cigarette share observations come from the July 24, 2026 filing; the supplied later passages do not establish an updated comparable cigarette-share figure. ZYN's June-to-September improvement is a shorter observation.
Retention is inferred from share, demand and adjusted IMS rather than measured customer cohorts. Adjusted IMS excludes estimated inventory movements and is not direct proof of individual repeat purchasing.
Organic growth is an adjusted measure excluding currency, acquisitions and divestitures. Combustibles revenue growth also includes distribution-term restructuring; U.S. pricing comparisons include prior-year promotional effects.
The supplied evidence does not establish network effects, a relative production-cost advantage, efficient-scale exclusion or material consumer switching costs. Proprietary consumables and authorizations alone do not prove these mechanisms.
Ownership requirements are disclosed, but actual executive holdings, compliance and realized long-term incentive payout quality are not established by the selected evidence. Governance provisions demonstrate structure rather than exceptional oversight effectiveness.
All cited source dates retain dateKind filed. Filing dates are not treated as separate publication or retrieval dates; financial and operating periods are identified separately.

Financial indicators to test against the thesis

Calculated from annual filings. Missing data remains unavailable. Detailed financial charts remain in the other topics.

Financial indicators to test against the thesis
Period	Gross margin	Operating margin	ROIC	FCF margin
2021	68.1%	41.3%	70.6%	35.7%
2022	64.1%	38.6%	40.6%	30.6%
2023	63.3%	32.9%	26.0%	22.4%
2024	64.8%	35.4%	30.1%	28.4%
2025	67.1%	36.6%	35.4%	26.2%

Pricing power56

Pricing outcomes
Reported third-quarter and nine-month combustibles growth includes favorable pricing despite adverse geographic or volume/mix effects. International smoke-free also realized favorable HTU pricing. U.S. improvement partly reflects prior-year promotions, and distribution-term restructuring contributes to combustibles growth, so neither revenue increase is attributed entirely to stronger underlying prices.
Customer demand
Cigarette share resilience alongside favorable pricing supports demand retention indirectly. Smoke-free adjusted IMS growth and the quarterly ZYN recovery strengthen that inference, but nine-month ZYN shipments declined. These aggregate measures cannot establish customer-level retention or isolate price elasticity, especially where inventory movements affect shipments.
Margin resilience
Third-quarter consolidated gross-profit growth and margin expansion were supported by combustibles pricing, scale and smoke-free mix. Combustibles gross profit also grew despite higher energy-related costs. This demonstrates pricing-supported resilience, qualified by the substantial nine-month U.S. gross-profit decline; margins alone are not used to establish the moat.
Pricing freedom
Government approval is required for price changes in certain markets, directly constraining discretion. Actual favorable pricing in combustibles and HTUs demonstrates practical flexibility, but does not establish unrestricted authority across markets. The geographic extent and economic weight of approval requirements are not quantified.

Management63

Capital discipline
Nine-month operating cash flow rose to $10.445 billion, with $1.115 billion of capital expenditures and $4.587 billion of long-term debt repayments. However, dividends and short-term borrowing also increased, and the $511 million RBH impairment records lost investment value. Cash-flow improvement includes non-operating-performance influences such as pension refunds; the allocation record remains mixed.
Incentive alignment
Performance-based awards, typically three-year metrics and executive ownership requirements support alignment. Committee payout discretion and the approved separation agreement's conditional future acceleration of the departing CFO's outstanding equity weaken performance contingency. The evidence establishes award design and contractual commitments, not completed separation vesting or actual ownership compliance.
Execution
Reported 2025 adjusted revenue and operating-income growth met targets, while operating cash flow exceeded target. Nine-month 2026 reported operating income rose 15.4% and adjusted organic operating income rose 7.7%. These outcomes support strong execution indirectly, qualified by U.S. profitability deterioration and the RBH impairment.
Governance
All directors except the chairman and CEO are independent, and standing committees are independent except Science and Technology. Annual elections and majority voting provide substantive accountability provisions. Absence of independent-director term or retirement limits qualifies the structure; these disclosures do not prove exceptional oversight effectiveness.

Sources and methodology

Current publication · Updated 23/10/2026 · Version 11

AI interpretation based on checked source excerpts. Issuer assertions and evidence limitations remain explicit.

Policy quality-scores-3: six equally weighted categories. The overall score requires full coverage. Missing inputs are not zero. Qualitative grades are sourced interpretations, not probabilities. 5/6 · 29/10/2026

Moat56

Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.

structural advantage · 3/4 · Principal-brand trademark rights, stable cigarette category share, Marlboro gains and realized combustibles pricing demonstrate valuable differentiation. Smoke-free pricing and demand add support. These outcomes establish a current brand advantage, while comparable competitor economics and equally strong protection across all categories remain unproven.

durability · 2/4 · Protected brands and continued pricing support persistence, but cigarette consumption is declining and U.S. ZYN shipments fell over nine months. Authorizations remain conditional. Historical IQOS exclusion, subsequently rescinded, demonstrates that intellectual-property disputes can interrupt access rather than provide assured protection.

customer dependency · 2/4 · Stable cigarette share, Marlboro gains and growing smoke-free adjusted IMS indicate repeat demand indirectly. They do not demonstrate captive customers or substantial switching friction. Inventory estimates qualify the demand measures, and nine-month ZYN shipment contraction shows uneven dependence across the portfolio.

erosion resilience · 2/4 · Combustibles pricing and distribution changes offset adverse nine-month volume/mix, while third-quarter smoke-free demand and ZYN shipments improved. Nevertheless, nine-month U.S. revenue, gross profit and adjusted operating companies income declined. This demonstrates meaningful but uneven resilience, rather than treating prospective competitive risks as realized losses.

Pricing power56

Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.

realized pricing · 3/4 · Reported third-quarter and nine-month combustibles growth includes favorable pricing despite adverse geographic or volume/mix effects. International smoke-free also realized favorable HTU pricing. U.S. improvement partly reflects prior-year promotions, and distribution-term restructuring contributes to combustibles growth, so neither revenue increase is attributed entirely to stronger underlying prices.

retention · 2/4 · Cigarette share resilience alongside favorable pricing supports demand retention indirectly. Smoke-free adjusted IMS growth and the quarterly ZYN recovery strengthen that inference, but nine-month ZYN shipments declined. These aggregate measures cannot establish customer-level retention or isolate price elasticity, especially where inventory movements affect shipments.

margin resilience · 3/4 · Third-quarter consolidated gross-profit growth and margin expansion were supported by combustibles pricing, scale and smoke-free mix. Combustibles gross profit also grew despite higher energy-related costs. This demonstrates pricing-supported resilience, qualified by the substantial nine-month U.S. gross-profit decline; margins alone are not used to establish the moat.

contractual freedom · 1/4 · Government approval is required for price changes in certain markets, directly constraining discretion. Actual favorable pricing in combustibles and HTUs demonstrates practical flexibility, but does not establish unrestricted authority across markets. The geographic extent and economic weight of approval requirements are not quantified.

Predictability98

5 consecutive published 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
observedAnnualPeriods: 5.00

Source 1

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, an original issuer-reported unadjusted EBIT reconciled to net income, income tax and signed net interest, or reported pretax profit plus reported gross interest expense. Reported EBIT is distinct from GAAP operating income and gross interest. 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

Source 1

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, an original issuer-reported unadjusted EBIT reconciled to net income, income tax and signed net interest, or EBIT calculated from reported pretax profit plus reported gross interest expense; the issuer-reported EBIT is distinct from GAAP operating income and gross interest; 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. ROIC remains undefined for nonpositive invested capital; the explicit asset-return alternative does not change the ROIC chart. Missing financial inputs alone never trigger an alternative. 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

Source 1

Management63

Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.

capital discipline · 2/4 · Nine-month operating cash flow rose to $10.445 billion, with $1.115 billion of capital expenditures and $4.587 billion of long-term debt repayments. However, dividends and short-term borrowing also increased, and the $511 million RBH impairment records lost investment value. Cash-flow improvement includes non-operating-performance influences such as pension refunds; the allocation record remains mixed.

incentive alignment · 2/4 · Performance-based awards, typically three-year metrics and executive ownership requirements support alignment. Committee payout discretion and the approved separation agreement's conditional future acceleration of the departing CFO's outstanding equity weaken performance contingency. The evidence establishes award design and contractual commitments, not completed separation vesting or actual ownership compliance.

execution · 3/4 · Reported 2025 adjusted revenue and operating-income growth met targets, while operating cash flow exceeded target. Nine-month 2026 reported operating income rose 15.4% and adjusted organic operating income rose 7.7%. These outcomes support strong execution indirectly, qualified by U.S. profitability deterioration and the RBH impairment.

governance · 3/4 · All directors except the chairman and CEO are independent, and standing committees are independent except Science and Technology. Annual elections and majority voting provide substantive accountability provisions. Absence of independent-director term or retirement limits qualifies the structure; these disclosures do not prove exceptional oversight effectiveness.

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.
2025 Form 10-K, filed 2026-02-06; Intellectual Property; principal-brand trademark rights and Marlboro geographic qualification · Filed 06/02/2026

Our cigarette category volume share stood at 25.3% (flat versus the prior year) despite adverse market mix.
June 2026 Form 10-Q, filed 2026-07-24; International Combustibles operating discussion; cigarette category volume share · Filed 24/07/2026

Marlboro continued to gain share (up by 0.3 percentage points) matching its record category share of 11.0%.
June 2026 Form 10-Q, filed 2026-07-24; International Combustibles operating discussion; Marlboro category share · Filed 24/07/2026

•Net revenues increased by 7.8% on an organic basis, reflecting: a favorable pricing variance, the restructuring of distribution terms in certain markets, and partially offset by unfavorable geographic mix.
Third-quarter 2026 earnings release, filed 2026-10-21; Third-Quarter Operating Review; International Combustibles revenue, pricing, distribution terms and geographic mix · Filed 21/10/2026

Shipments increased by 0.6% in the quarter, driven by a 2.7% increase in smoke-free products (SFP), with shipment growth across all categories, supported by high single-digit growth in SFP adjusted in-market sales (IMS), which is the closest proxy to consumer offtake.
Third-quarter 2026 earnings release, filed 2026-10-21; Results Highlights; shipments and adjusted in-market sales · Filed 21/10/2026

•Net revenues increased by 3.4% on an organic basis, reflecting: a favorable volume/mix driven by higher HTU and e-vapor volumes and a favorable pricing variance due to HTUs.
Third-quarter 2026 earnings release, filed 2026-10-21; Third-Quarter Operating Review; International Smoke-Free revenue, volume/mix and HTU pricing · Filed 21/10/2026

ZYN now has PMTA authorization of 31 variants in total, more than any other nicotine brand on the market.
Third-quarter 2026 earnings release, filed 2026-10-21; U.S. discussion; ZYN PMTA authorizations · Filed 21/10/2026

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.
2025 Form 10-K, filed 2026-02-06; Competition; named industry competitors · Filed 06/02/2026

Consumption of tax-paid cigarettes continues to decline in many of our markets.
2025 Form 10-K, filed 2026-02-06; cigarette-consumption risk discussion · Filed 06/02/2026

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.
2025 Form 10-K, filed 2026-02-06; governmental approval requirements for price changes in certain markets · 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.
June 2026 Form 10-Q, filed 2026-07-24; competitive-position risks · 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.
2025 Form 10-K, filed 2026-02-06; historical IQOS importation and sales prohibition before rescission · 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.
2025 Form 10-K, filed 2026-02-06; ITC orders and rescission granted March 11, 2024 · Filed 06/02/2026

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.
June 2026 Form 10-Q, filed 2026-07-24; tobacco-product authorization conditions · Filed 24/07/2026

Our U.S. oral smoke-free products shipment volume decreased by 5.8% to 10.0 billion equivalent units, including a 6.0% decline in ZYN shipments to 8.4 billion pouches.
September 2026 Form 10-Q, filed 2026-10-23; U.S. nine-month oral smoke-free and ZYN shipment performance · Filed 23/10/2026

U.S. Segment •Net revenues decreased by 5.5% organically, reflecting: unfavorable dynamics in the first quarter with ZYN volumes impacted by distributor and trade inventory movements, slightly offset by favorable price comparisons against higher promotional activities in the third quarter last year.
Third-quarter 2026 earnings release, filed 2026-10-21; nine-month U.S. operating review; revenue decline, inventory effects and promotional comparisons · Filed 21/10/2026

•Gross profit decreased by 14.6% on an organic basis reflecting the same factors as for net revenues and higher manufacturing costs.
Third-quarter 2026 earnings release, filed 2026-10-21; nine-month U.S. operating review; organic gross-profit decline · Filed 21/10/2026

•Adjusted OCI decreased by 41.1% organically, to $550 million, reflecting the same factors as for gross profit and increased investments in marketing, administration and research costs.
Third-quarter 2026 earnings release, filed 2026-10-21; nine-month U.S. operating review; adjusted operating companies income and investment · Filed 21/10/2026

In the U.S., total ZYN shipments grew by 4.2% to 3.2 billion pouches, despite challenging comparisons against a special promotional campaign last year and supported by the ongoing launches of ZYN ULTRA, new flagship dry flavors, 1.5mg and 8mg flagship variants.
Third-quarter 2026 earnings release, filed 2026-10-21; U.S. ZYN pouch shipments, promotional comparison and product launches · Filed 21/10/2026

Operating companies income decreased by 3.3% (increased by 1.5% organically), including a significant increase in commercial investments to support the expansion of our ZYN portfolio, which increased its category share by over 100 basis points between June and September, as estimated by Nielsen.
Third-quarter 2026 earnings release, filed 2026-10-21; U.S. operating companies income, commercial investment and June-to-September ZYN category-share change · Filed 21/10/2026

U.S. Segment •Net revenues increased by 22.7%, primarily reflecting: growing ZYN shipments of 4.2%, and a favorable price variance against prior year promotions, supported by growth in the Wellness business and cigars.
Third-quarter 2026 earnings release, filed 2026-10-21; Third-Quarter Operating Review; U.S. revenue growth and prior-year promotional pricing comparison · Filed 21/10/2026

Gross profit increased by 6.7% (8.3% organically), expanding gross margins through strong combustible pricing, scale and SFP mix benefits.
Third-quarter 2026 earnings release, filed 2026-10-21; consolidated gross-profit growth and margin drivers · Filed 21/10/2026

•Gross profit increased by 9.8% organically due to the same factors as for net revenues, slightly offset by higher costs due to increases in energy-related input prices.
Third-quarter 2026 earnings release, filed 2026-10-21; Third-Quarter Operating Review; International Combustibles gross profit and energy-related costs · Filed 21/10/2026

International Combustibles Segment •Shipment volume declined by 1.2% with notable decreases in Russia, Mexico, and Germany, partly offset by Turkey and Egypt.
Third-quarter 2026 earnings release, filed 2026-10-21; nine-month International Combustibles shipment decline · Filed 21/10/2026

•Net revenues increased by 5.2% on an organic basis, reflecting: a favorable pricing variance and the previously mentioned restructuring of distribution terms in certain markets, partially offset by unfavorable volume/mix.
Third-quarter 2026 earnings release, filed 2026-10-21; nine-month International Combustibles revenue, pricing, distribution terms and volume/mix · Filed 21/10/2026

•Adjusted in-market sales or "adjusted IMS" is defined as in-market sales excluding distributor and/or trade inventory movements, which are estimated using a number of internal and external sources.
Third-quarter 2026 glossary, filed 2026-10-21; definition of adjusted IMS and inventory estimates · Filed 21/10/2026

•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.
Third-quarter 2026 glossary, filed 2026-10-21; inventory-related limitations of shipments, IMS and estimated market volumes · Filed 21/10/2026

Operating Cash Flow ($ in millions) / (Unaudited) Quarters Ended September 30, Nine Months Ended September 30, 2026 2025 % Change 2026 2025 % Change $ 5,352 $ 4,462 19.9 % Net cash provided by operating activities (1) $ 10,445 $ 7,524 38.8 % (1) Operating cash flow 25
Third-quarter 2026 financial schedules, filed 2026-10-21; Operating Cash Flow; unaudited quarterly and nine-month comparisons in millions of dollars · Filed 21/10/2026

Condensed Consolidated Statements of Cash Flows (Continued) (in millions of dollars) (Unaudited) For the Nine Months Ended September 30, 2026 2025 CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES
September 2026 Form 10-Q, filed 2026-10-23; cash-flow financing table; unaudited millions of dollars, nine months ended September 30, 2026 and 2025 · Filed 23/10/2026

Net issuances (repayments) - maturities of 90 days or less $ 1,907 $ 1,733 Issuances - maturities longer than 90 days 1,659 170 Repayments - maturities longer than 90 days (1,191) (170) Long-term debt proceeds 1,478 3,596 Long-term debt repaid (4,587) (2,316) Dividends paid (6,903) (6,329) Collateral received/settlements for derivatives, received/(returned) 268 (815) Noncontrolling interests activity and Other
September 2026 Form 10-Q, filed 2026-10-23; financing cash-flow rows; read with e29 for period, units and column order · Filed 23/10/2026

Accrued liabilities and other current assets (1,892) (2,479) Income taxes 162 (564) Pension plan contributions, net of refunds (Note 4) 582 (91) Other 557 546 Net cash provided by (used in) operating activities 10,445 7,524 CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES Capital expenditures (1,115) (1,125) Proceeds from sale of businesses, net of cash disposed (Note 2) 87 32 Purchases of debt securities (5) (159) Sales and maturities of debt securities 193 25 Equity investments (45) (48) Collateral posted/settlements for derivatives, (paid)/returned (Note 6) 417 (2,318) Other (16) 54 Net cash provided by (used in) investing activities (484) (3,539) See notes to condensed consolidated financial statements.
September 2026 Form 10-Q, filed 2026-10-23; nine-month operating and investing cash-flow rows; millions of dollars, 2026 followed by 2025 · Filed 23/10/2026

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.
June 2026 Form 10-Q, filed 2026-07-24; realized RBH equity-investment impairment · Filed 24/07/2026

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.
2026 proxy statement, filed 2026-03-26; existing PSU and RSU allocation · Filed 26/03/2026

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.
2025 Form 10-K, filed 2026-02-06; metrics and weights for PSUs granted during 2025 · 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.
2025 Form 10-K, filed 2026-02-06; predetermined PSU performance requirements and typical three-year cycle · Filed 06/02/2026

Share Ownership Requirements The Company’s share ownership guidelines require each of our named executive officers to own shares multiple times his/her base salary based upon his/her salary grade.
2026 proxy statement, filed 2026-03-26; named-executive share-ownership requirements · Filed 26/03/2026

In addition, Mr. Babeau’s then outstanding equity awards will fully vest.
CFO separation Form 8-K, filed 2026-07-09; contractual future vesting of then-outstanding equity awards · Filed 09/07/2026

Babeau’s continued employment through the Separation Date and compliance with the other obligations set forth in the Separation Agreement.
CFO separation Form 8-K, filed 2026-07-09; continued-employment and compliance conditions on separation agreement · Filed 09/07/2026

The Compensation Committee also retains discretion to adjust the payout of PSU awards as it determines is appropriate.
2026 proxy statement, filed 2026-03-26; Compensation Committee discretion over PSU payouts · 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%.
2026 proxy statement, filed 2026-03-26; reported 2025 adjusted organic net-revenue outcome against 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%.
2026 proxy statement, filed 2026-03-26; reported 2025 adjusted organic operating-income outcome against target · Filed 26/03/2026

Operating Cash Flow: Operating cash flow of $12.2 billion exceeded our target of $10.6 to $11.1 billion.
2026 proxy statement, filed 2026-03-26; reported 2025 operating cash flow against target · Filed 26/03/2026

Currency & Acquisitions / Divestitures Operating Income Adjusting Items (1) Adjusted Operating Income Total Excluding Currency Excluding Currency & Acquisitions / Divestitures 2026 Quarters Ended September 30, 2025 % Change $ 4,866 $ (251) $ 5,117 $ (39) $ 5,156 $ (3) $ 5,159 Total PMI $ 4,263 $ (407) $ 4,670 9.6 % 10.4 % 10.5 % 2026 Nine Months Ended September 30, 2025 % Change $ 13,289 $ (769) $ 14,058 $ 379 $ 13,679 $ (5) $ 13,684 Total PMI $ 11,519 $ (1,187) $ 12,706 10.6 % 7.7 % 7.7 % (1) Adjusted Operating Income and Adjusted Operating Companies Income excluding currency and acquisitions / divestitures are calculated using the same adjusting items as Operating Companies Income, as presented in Schedule 10 and Schedule 11 20 Schedule 13 PHILIP MORRIS INTERNATIONAL INC.
Third-quarter 2026 financial schedules, filed 2026-10-21; quarterly and nine-month reported and adjusted operating-income reconciliation; unaudited millions of dollars · Filed 21/10/2026

All directors other than our Chairman and Group CEO PMI are independent.
2026 proxy statement, filed 2026-03-26; board independence · Filed 26/03/2026

All standing Committees, other than the Science and Technology Committee, are comprised only of independent directors.
2026 proxy statement, filed 2026-03-26; 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).
2026 proxy statement, filed 2026-03-26; annual director elections · Filed 26/03/2026

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).
2026 proxy statement, filed 2026-03-26; majority voting in uncontested director elections · Filed 26/03/2026

Director Term and Retirement There are no term limits or a retirement age for independent directors.
2026 proxy statement, filed 2026-03-26; absence of independent-director term limits or retirement age · Filed 26/03/2026

•Growth rates presented on an organic basis reflect adjusted results, excluding currency, acquisitions and divestitures.
Third-quarter 2026 glossary, filed 2026-10-21; organic growth definition · Filed 21/10/2026

Publication history

Publication history
Version	Updated	Competitive advantage
11	29/10/2026	narrow
10	27/10/2026	narrow
9	24/10/2026	narrow
8	23/10/2026	narrow
7	23/10/2026	narrow
6	22/10/2026	narrow
5	19/10/2026	narrow
4	18/10/2026	narrow
3	18/10/2026	narrow
2	18/10/2026	narrow

Sources

Research methodology and limitations · What is an economic moat?