“As expected, input cost headwinds eased compared to recent years and based on current assumption, we expect this to further improve in 2026.”

In context

“tive unit economics and pricing on both HTUs and ZYN. Very strong IQOS gross margin expansion reflects the powerful growth and scale effect of this large and growing business, manufacturing productivity, and a comparison benefit from higher device shipment in the prior year when ILUMA i was launched in Japan. On an organic basis, combustible net revenues and gross profit grew by plus 3.8% and plus 5.3% respectively. While pricing was strong and volume were positive, there was a notably negative geographic mix this quarter due to growth in markets such as Turkey and Egypt, in addition to the technical impact from Indonesia. We expect gross pricing and negative geographic mix to moderate over the rest of the year and target combustible gross margin expansion organically and in dollar terms. As expected, input cost headwinds eased compared to recent years and based on current assumption, we expect this to further improve in 2026. Taking a closer look at our volumes, shipment growth of plus 3.9% was primarily driven by our smoke-free business with all categories contributing positively and placing us on track for a fifth consecutive year of total volume growth. Smoke-free volumes grew by plus 14.4%, above our full year target range of plus 12% to plus 14%, reflecting very positive contribution from IQOS, ZYN, and VEEV. In addition to the growth of these three brands, which I covered earlier, I would also note that our oral smoke-free business includes US Moist Snuff and Scandinavian Snus, which declined modestly in the quarter. Despite this, oral smoke-free product shipment growth accelerated versus the prior quarter to plus 27%. Cigarette volumes were positive for the fourth consecutive quarter as we grew share in”