Phillip Morris International (NYSE: PM)
Company Overview
PMI is a consumer‑staples company headquartered in Connecticut. The company’s stated strategy is to “deliver a smoke‑free future” by developing and commercializing smoke‑free products that are positioned as less harmful alternatives to combustibles. Cigarettes still account for the largest share of revenue, but non‑combustibles (heated tobacco, e‑vapor, and oral nicotine pouches) are growing faster. Smoke‑free products are not risk‑free and contain addictive nicotine; however, research indicates they are generally less harmful than traditional cigarettes.
Disclaimer: I do not endorse or encourage vaping, smoking, or the use of any smoke or smoke-free products. Nicotine is scientifically proven to be addictive and carries significant health risks and side effects.
Key Products
Heated Tobacco (Inhalables)
IQOS (launched in the U.S. in 2019) heats tobacco rather than burning it. Users insert heated tobacco units (e.g., HEETS) into a device that releases nicotine and tobacco flavor without traditional smoke.
Second‑largest HTU brand by industry volume
Strong presence in Japan and Europe
E‑Vapor
VEEV uses a heated e‑liquid to produce an aerosol inhaled by users (no tobacco stick).
Specific brand stats are limited publicly; noted as a top‑three brand in select European markets
Oral Nicotine Pouches
ZYN pouches are placed under the lip for ~60 minutes; nicotine is absorbed orally.
Shipments: +28% (cans) and +25% (pouch equivalents)
165M cans sold (typical can ~15 pouches, 3/6 mg)
2024 sales: +42% YoY
Combustibles
Traditional smoke products (e.g., Marlboro). PMI owns Marlboro rights outside the U.S.; Altria owns U.S. rights.
Cigarette Sale volume declining YoY by
Industry & Market
Global tobacco market size (2025): ~$988.4B; projected growth ~2.5% YoY.
China remains the largest producer; CNTC holds ~97% market share domestically. PMI’s exposure to China is minimal.
Traditional smoking prevalence has fallen globally (e.g., ~22.7% in 2007 to ~17% in 2019), while adoption of e‑cigs, HTUs, and oral pouches has risen. U.S. e‑cig usage among adults:
4.0% (2020) → 4.5% (2021) → 6.3% (2023).
ZYN category growth: +641% sales (2019–2022); 385M cans sold in 2023 (+62% YoY). The nicotine‑pouch industry is estimated at $5.39B with projected ~29.6% CAGR through 2030.
Consumer perception increasingly views vaping/heated tobacco as safer than combustibles, supporting category momentum (perception does not imply no risk).
Competitors & Positioning
PMI is a global leader in smoke‑free products alongside substantial combustible share. The category is oligopolistic with high barriers to entry (capital, distribution, regulatory, and technology/IP).
*Altria owns Philip Morris USA (U.S. Marlboro rights). Rights to IQOS, VEEV, and ZYN belong to PMI.
IP/Barriers: IQOS “heat‑not‑burn” has patent protection in the U.S. and EU, with some protections expiring in the late 2020s/early 2030s.
Financials
Phillip Morris Revenue Breakdown
Income Statement;
FY2024 saw net revenue rose to 37.9B, an increase of 7.7% compared to 2023
EBIT of 13.4B, 16% growth YoY with a 35.4% operating margin
Net earnings are down from $8.268B to $7.06B, largely attributable to a a $2.316B RBH goodwill impairment
Balance Sheet;
Assets:
Total assets down from $65.304B to $ 61,784B
Additional 1.427B worth of inventory converted to cash/accounts receivable
Current assets up from 19.755B to 20.170B
Non-current assets down largely due to goodwill impairment of RBH in Canada (-2.316B); shown in decrease of equity investments from 4.929B to 2.654B
Liabilities;
Total liabilities down from 74.75B to 71.65B, mostly attributable to the current portion
Current portion of LT debt decreased from $4.698B to $3.392B
Taxes paid decreased by 610M
Cash Flow Statement;
Net earnings 7.503B, decrease from 8.268B (due to RBH impairment)
Net cash provided by operating activities increased to $12.22B from $9.204B
Net cash used in investing activities decreased from $3.598B to $1.092B. No major equity investments in FY2024
Capital expenditures increased from $1.321B to $1.444B
Paid $8.197B in dividends, up from FY2023 of $7.964B
Cash balance increased from $3.146B to $4.254B
Opinion
I would once again like to repeat that I am in no way encouraging vaping, smoking or any consumption of smoke or smoke-free products. Nicotine is scientifically proven to be addictive, with major side effects and health risks. Please consult a healthcare professional if you experience any adverse effects or concerns related to these products.
The upcoming generation is shifting away from traditional cigarettes and combustible tobacco products. In China, cigarettes remain extremely prevalent and are dominated by the domestic producer CNTC. In my travels to the United Kingdom, the usage of Zyns and e-cigarettes is extremely common. Three out of my four caddies during my rounds at Carnoustie, St. Andrew’s Old Course, Royal Troon and Dumbarnie Golf Links consumed e-cigarettes or Zyns.
While obviously my experiences are a minuscule sample size, the reason I am relatively optimistic of Phillip Morris’ future is their adaptability to the changing climate and the early signs of success for their burgeoning products, especially ZYNs. As the youth shift away from traditional cigarettes, PM stands as a global leader in various product lines. Swedish Match — PM’s subsidiary in charge of ZYNs — has significant room for growth. In particular, ZYNs obviate a critical issue for nicotine consumers: the stigma of taking out a vape or cigarette. By allowing the user to consume nicotine without manually having to pull out a vape and ‘take a hit’, ZYN pouches allow for passive consumption of nicotine without manual effort.
Phillip Morris stands at the intersection of generations. As traditional cigarette consumption begins to decline, the new generation begins to embrace a different variant of nicotine products. Shown by the revenue growth in various lines of products such as heated tobacco and ZYNs, PM is in a great position to adapt to the changing market and pivot towards achieving their goal of delivering a smoke free future.
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