PM (PM)

“We target adjusted diluted EPS of $2.20 to $2.25, including an unfavorable currency impact of $0.08 at prevailing exchange rates.”

“For PMI overall, we forecast mid-single-digit Q3 organic top-line growth with modest organic margin expansion.”

“We, thus, expect mid-single-digit international smoke-free organic net revenue and gross profit growth.”

“For Q3, specifically, we expect HTU shipment volume of around 41 billion units against a strong Q3 2025, when HTU shipment grew by 15.5%.”

“We plan further extension in the coming months, including the introduction of 1.5 milligram and eight milligram dry formats in Q3.”

“However, it is important to note that volume comparison in Q3 will be impacted by the one-off promotional activity in September of last year, which accounted for around 250 million pouches.”

“We continue to expect operating cash flow generation of around $13.5 billion, providing further flexibility to support both investment and continued attractive shareholder return.”

“We also expect robust progress at the EPS level while noting challenging H2 comparison on net finance cost and the effective tax rate.”

“Further robust international progression should be complemented by U.S. momentum, notwithstanding a fairly even phasing of international HTU shipments through the four quarters, with shipment broadly in line with adjusted IMS for the full year.”

“For the second half, this implies a continued strong top line and an acceleration in organic operating income growth.”

“With an expectation of broadly stable to slightly growing volumes, we are also aiming for our sixth consecutive year of total volume growth.”

“In dollar terms, we now forecast a currency tailwind of around $0.15 at prevailing rates, translating into an adjusted diluted EPS range of $8.26 to $8.41, an increase of 9.5% to +11.5%.”

“For 2026, we continue to target organic net revenue growth of +5% to +7%, organic operating income growth of +7% to +9%, and currency neutral adjusted diluted EPS growth of +7.5% to +9.5%.”

“Although we expect this additional benefit will be largely offset by a more adverse geographic mix as volumes skew more to markets with lower per-unit revenues.”

“While we expect some moderation in H2 due to timing factors and annualization, we now forecast a pricing variance of more than 7% for the full year.”

“With such an exciting lineup of new products to complement the existing portfolio, we plan to accelerate our U.S. investment in the second half.”

“Looking to the second half, we expect the dynamism of ZYN to be enhanced by our expanding portfolio and increased commercial activity, which I'll come back to shortly.”

“We continue to target growth in IQOS adjusted IMS volume for the year overall.”

“While the biggest step is behind us, we expect further category volatility in H2, notably around the excise change in October, and we will expect similar consumer behavior patterns, including pantry loading and subsequent normalization.”

“The heat-not-burn category continued to represent more than half of total nicotine offtake, and we expect this to continue growing over time.”

“As implied in our full-year forecast, we expect to deliver organic operating income margin expansion for the full year.”

“We now expect higher SG&A costs in the second half than previously anticipated, as we made the strategic decision to step up our U.S. growth investment.”

“Taken together, we now expect total shipment volume to be around stable to slightly positive for the full year, with high single-digit growth in smoke-free products broadly offsetting the decline in cigarettes.”

“Given our Q2 performance and the latest industry dynamics, we now expect a more moderate full-year decline in our cigarette volumes of around 2%-3%, versus 3% previously, which remains consistent with the structural evolution of the category.”

“Supported by a rich product pipeline and improving regulatory clarity, we believe it is the right moment to accelerate U.S. investment in the second half of the year to support ZYN's brand equity and portfolio expansion and to prepare for the future launch of IQOS ILUMA.”

“While we do not expect this delivery to be repeated to the same magnitude for the full year, such results demonstrate the robustness of our portfolio as we leverage our leadership in cigarettes to support the switching of legal-age smokers to better alternatives.”

“In addition, our U.S. investment includes preparation for the future launch of IQOS ILUMA, subject to FDA action.”

“our base expectation is that ZYN shipments should broadly track offtake growth in future quarter against the estimated underlying 2025 basis provided in February of approximately 180 million can in Q2, 205 million cans and 200 million cans in Q4.”

“And therefore, we expect ZYN Ultra to be able to bring some renewed momentum to the Zen brand in the coming months.”

“And organic operating income growth of plus 7% to plus 9% and currency-neutral adjusted diluted earnings per share growth of plus 7.5% to plus 9.5%.”

“Acknowledging this uncertainty and following a good start to the year in Q1, we are reconfirming the currency-neutral growth outlook we provided in February. We continue to expect broadly stable shipment volumes, organic net revenue growth of plus 5% to plus 7%.”

“In addition, we have made a number of ZYN submission to the FDA that are at various stages of the regulatory process, and we are preparing to bring further innovation to market also in the coming months.”

“We remain on track for full year organic margin expansion in 2026.”

“we expect Poland and Hungary, of course, to go through this disruption and put that behind them in the coming quarters as we did in other countries in Europe.”

“While exchange rates are volatile at present, we now forecast a currency tailwind of $0.25 at prevailing rates. This result in an updated adjusted diluted EPS forecast of $8.36 to $8.51 or plus 10.9% to 12.9% growth in dollar terms.”

“We have factored in some increases in transport, energy and other input costs.”

“While we expect some moderation notably in the second half of the year due to timing and comparison effect, we now forecast a full year variance of more than 6%.”

“We expect further good growth from IQOS in Europe in the remainder of the year.”

“While Q2 is likely to see further strong year-over-year investment, we expect this to moderate in H2 and for SG&A progression to be organically at or below the level of net revenue growth for the year.”

“Looking ahead, we expect volume declines to moderate over the coming quarters, and we continue to forecast a cigarette volume decline of around 3% for the full year.”

“We continue to expect strong global smoke free growth for the full year, supported by high single-digit volume progression and normalizing U.S. comparison.”

“We continue to invest for future growth and expect U.S. performance to progressively improve over the course of 2026 as we prepare to launch ZYN Innovations and comparison normalize, notably in the second half.”

“The science supporting our application is robust, and we are optimistic that we will be able to launch this product to consumers in the coming months.”

“We target smoke-free product shipment and adjusted IMS volume growth of high single digits to low teens.”

“9% to 11% in adjusted diluted EPS constant currency.”

“eight to 10% in organic operating income as margins expand”

“for the three-year period to 2028 we continue to target compound annual growth rate of six to 8% in organic net revenues eight to 10% in organic operating income as margins expand and 9% to 11% in adjusted diluted EPS constant currency.”

“Combining our 2026 forecast with the strong results of 2024 and 2025, we expect to meet up or exceed all of our 2024-2026 CAGR targets presented at our 2023 Investors Day.”

“I think it's gonna happen. Okay? Summer this year,”

“But let's be clear, in '25 the yen had a negative impact, and we are expecting in '26 another negative impact coming from the Japanese yen.”

“even with that, we are targeting to have this resilient model where with a decline in volume, we believe we can grow low single digit the revenue and low to mid-single digit the growth profit.”

“We expect further improvements in 2026 targeting close to the 2x by year-end at prevailing exchange rate.”

“We expect a significant acceleration in operating cash flow growth at around €13.5 billion at prevailing exchange rates and is subject to year-end working capital requirement.”

“We are forecasting currency-neutral adjusted diluted EPS growth of 7.5% to 9.5% factoring in broadly stable net finance cost and an effective corporate tax rate approximately in line with 2025 at around 21.5%.”

“We expect the same factors in addition to operating leverage and ongoing cost efficiencies to drive further robust margin expansion with projected organic operating income growth of seven to 9%.”

“Taking all these elements into account, we forecast 2026 organic net revenue growth of five to 7%.”

“For combustibles, we forecast a cigarette decline of around 3% with weaker industry volumes in India and Mexico following the recent excise tax increases and our own recovery in Turkey likely to impact comparisons in the first half.”

“Both shipments and adjusted IMS volumes are projected to grow in a high single digit after factoring in the headwinds from Japan excise taxes and US zinc inventory comparisons described earlier.”

“For 2026, we forecast a convertible pricing variance of around plus 6%, reflecting continued dynamic performance.”

“As I mentioned before, we continue to expect ZYN to deliver best-in-class gross margin within PMI above the average of IQOS.”

“Looking ahead to 2026, we expect ZYN shipment volume to broadly reflect offtake growth from this underlying base, before any further channel inventory movement.”

“Importantly, we do not expect the underlying category growth trend to change and we target substantial further growth from IQOS in Japan in the years to come.”

“We anticipate these price increases will impact category growth and volume for 2026, despite the fact that heat not burn consumers have demonstrated higher price resilience than cigarette smokers in the past.”

“With our dividend payout now close to our objective of around 75% of adjusted diluted EPS, this provides capacity for strong returns to shareholders.”

“we target the leverage ratio of close to 2x by 2026 at prevailing exchange rates.”

“With another strong performance expected in 2026 despite some transitory headwinds, we are today renewing these growth targets for the next three years, further validating our best-in-class growth profile within consumer packaged goods.”

“We expect this growth to drive strong adjusted OI margin expansion to land firmly back above 40%.”

“The increasing overall profitability of our smoke-free business coupled with cost efficiency measures and combustible resilience, places us well on track for another year of double-digit adjusted operating income and earning per share growth in currency neutral terms and even stronger dollar growth at prevailing exchange rates.”

“And we are also having some as we explained, slightly positive or better views on the tax rate. And I should probably add that interest costs are not evolving in an unfavorable manner, but rather in a favorable manner.”

“Then I also flagged in my remarks that the tax rate will be significantly higher to lend us around 20%, which is our vision today.”

“What's going be a bit less favorable is price increase. Because indeed, we expect due to phasing of pricing and so on, a lower Q4.”

“When it comes to combustible, and it's still 50% plus of the group, we expect to be again between 3% to 4% decline in volume, so nothing has changed in our vision of H2.”

“So in terms of Smokefree portfolio, expect even IQOS to accelerate. We expect ZYN continue to grow very fast.”

“But taking that into account, I'm happy to repeat that we expect ZYN In this new normal or in this normal, I would say, situation to remain very nicely the best in class margin in the group.”

“But nevertheless, in Q4, we are also expecting to align clearly shipment and IMS.”

“So we expect an acceleration of IMS growth in Q4.”

“In terms of our balance sheet, we continue to target further deleveraging in 2025 with $0 currency movement, of course, having a potential influence on our ultimate year-end leverage ratio.”

“In addition, we are upgrading our full year operating cash flow forecast to more than $11.5 billion at prevailing exchange rate subject to year-end working capital requirement.”

“In Q4, we expect a continued strong performance from our Smokefree business, including an acceleration in 6% currency neutral adjusted diluted EPS growth.”

“The 2025 forecast includes an adjusted effective tax rate of around 22% for the year based on the latest assessment of tax dynamic and market. Mix.”

“We are raising our adjusted diluted earnings per share forecast to the mid to upper end of our previous currency neutral growth range at plus 12 to plus 13.5%, which translate into plus 13.5% to plus 15.1% in dollar term.”

“We expect another year of double-digit organic operating income progression, where we now forecast plus 10 to plus 11.5% growth for the year including the same factor as net revenues.”

“Consistent with smoke-free volumes and given the top-line impact of U.S. Investment, the lower half of this range is also more likely.”

“We continue to forecast organic net revenue growth of plus six to plus 8%, driven by positive volumes smoke remix and pricing.”

“This Q4 HTU forecast includes modestly lower channel inventory and a reversal of around 2 billion units, due to timing impact with HTU shipment growth thus broadly in line with our plus 10 to plus 12 adjusted IMS growth forecast for 2025 overall.”

“Smoke reshipment growth is more likely to be in the lower half of this range, factoring in the potential inventory adjustments for ZYN I described, and expected IQOS HTU shipments of close to 38 billion units in Q4.”

“Our fifth consecutive year of volume growth including a cigarette decline of around 2%, smoke-free volume growth of plus 12 to plus 14%.”

“This starts with shipments, where we continue to target total PMI growth of around plus 1%.”

“We now forecast full year pricing a little above plus 7%, with a slowdown in Q3 as expected due to timing factors.”

“We anticipate a 20 million to 30 million can inventory reduction in the coming months, this impact being effectively delayed from Q3 given strong September promotional activity.”

“On a more short-term basis, we continue to expect H2 shipment volume growth broadly in line with offtake growth before channel inventory movement.”

“We expect ZYN to continue delivering best in class margins within PMI.”

“Altogether, we expect ZYN will continue to be an important growth driver of PMI net revenue and operating income.”

“With our return to full commercial activity, we expect to maintain a higher level of promotion than H1, as we continue to adapt our marketing mix to provide the appropriate level of support for the brand and the growth of the category.”

“We expect a nice acceleration in adjusted AMS growth in Q4.”

“As flagged last quarter, we expect double-digit growth in H2, and plus 10% to plus 12% growth in adjusted IMS for the year, including an acceleration in the fourth quarter.”

“We anticipate SG and A cost will increase slightly more than underlying net revenue for the year excluding currency, reflecting this strong reinvestment.”

“Our year-to-date adjusted effective tax rate was 1% lower than our forecast of around 22% rate for the year, with a higher rate expected in Q4.”

“This drives our confidence in strong and sustainable adjusted diluted EPS growth in both currency neutral and dollar terms.”

“Given our strong year-to-date and expected full-year performance, we are well on track to exceed our twenty twenty four twenty twenty six CAGR targets.”

“Importantly, we remain on track for our target ratio of around 2x net debt to EBITDA, by the 2026.”

“And we remain well on track to deliver our planned $2 billion cost saving objective over twenty twenty four twenty twenty six.”

“This includes an estimated Tencent currency tailwind and we would expect a similar size tailwind for 2026 all at prevailing exchange rates.”

“and we expect the Tipsak hearing from ZYN MRTP application in the 2026.”

“But that would be nevertheless my my expectation.”

“Can I just nevertheless say that there is still the possibility that we finish above 11%, which was the previous guidance?”

“And even I'm not excluding the possibility to have as you know, we manage inventory level here and there. To have shipment a bit below IMS for the year.”

“So we're gonna restart normal activity and that will certainly include more promotion.”

“On the capacity, we can say that today, we we have been building a a comfortable capacity to face all kind of of very dynamic growth scenario for the for the future, and, therefore, we are we are comfortable for the coming quarters.”

“So of course, if we give this bracket, we believe that we can finish the the year within the bracket at you know, at every point of the of the bracket. We give the eight hundred to eight hundred forty million.”

“So price yes, but provided it does not impact in a meaningful manner the volume trajectory. That is a strategy, and that is what we will continue to do.”

“So you're right. Globally today, you know, when we say that for the the year, we are targeting to be around minus two percent in term of shipment.”

“This drives our confidence in strong and sustainable adjusted diluted EPS growth in both currency neutral and dollar terms.”

“We are also raising our currency neutral adjusted diluted EPS growth to plus 11.5 to plus 13.5%.”

“Following excellent H1 top line in Amazon and margin progression, we are raising our forecast range for organic operating income growth to plus 11% to plus 12.5%.”

“The full year, we continue to expect very strong organic net revenue growth in the range of plus 6% to plus 8%.”

“With our US production capacity increased ahead of plan, and now well set for this year and beyond.”

“We continue to target full year US shipment of 800 to 840 million cans, including a sequential step up in Q4.”

“We continue to target plus 10% to plus 12% HTU adjusted IMS growth for the year.”

“Importantly, with the forecast full year increase of around plus 1%, we continue to target our fifth consecutive year of total volume growth as we do for future years as our smoke portfolio continues to drive performance.”

“For combustible, I think we said that we have the ambition to increase the gross margin as well, and that is valid for for for H2.”

“expect margin on smoke free to stay high and expect, of course, the progress year on year to be reduced because we are facing higher margin last year on the smoke free business.”

“We have a small prebinder that is around doesn't mean that it can be a bit below, but around 70% gross margin And I would expect H2 not to be very materially different.”

“Despite that, we expect a growth on gross profit for combustible, but nevertheless at a lower level of course, than in in in H1.”

“expect the continuation of this very strong acceleration of ZYN in the US”

“When we look at H2, in fact, we expect a continuation of these very strong momentum that we've seen in H2 on smoke free. So we expect IQOS to continue to grow double digit in term of adjusted IMS.”

“So I would say momentum is rebuilding. Now there will be some phasing last year on the performance in Europe, but I think we are expecting a nice performance overall for H2.”

“And then we say there is a step up in q four.”

“Project capital expenditures slightly above our prior forecast at around $1.66 billion primarily due to further international ZYN capacity investment with CapEx spend almost entirely focused on supporting the growth of smoke-free.”

“Given our expectation for a strong full year profit delivery and cash conversion, we are raising our forecast for operating cash flow to around $11.5 billion at prevailing action rate and subject to year end working capital requirements.”

“This includes an estimated ten cent favorable currency impact at prevailing exchange rate with favorable earnings translation from the broadly weaker dollar partly offset by transactional impact due to currency volatility which I covered earlier.”

“In dollar terms, we expect adjusted diluted EPS growth of plus 13% to plus 15%.”

“This includes a slightly improved effective corporate tax rate of approximately 22% to 23%, based on the latest assessment of tax dynamic and market mix.”

“We expect further double digit HTU adjusted IMS progression with growth skewed to the fourth quarter given a strong comparison in Q3.”

“We expect continued strong momentum on both IQOS and ZYN alongside robust pricing and meaningful margin improvement.”

“While we continue to expect a moderation in H2 pricing due to timing and comparison dynamic, We now forecast plus 6% to plus 7% for the full year.”

“With shipments now primarily driven by consumer of tech, we expect a broadly similar level of shipment in Q3 as in Q2, factoring in the possibility of a few days adjustment to wholesaler and this inventory, as the situation fully normalized.”

“We expect further strong adjusted IMS growth in the remainder of the year.”

“As we progress our commercial pilot in Austin, we also launched a second pilot in Fort Lauderdale during the quarter with further initiative planned in the coming months as we prepare for the at scale launch of IQOS Iluma once authorized by the FDA.”

“While competitive activity is increasing, we see this as positive for category growth over time, and we expect continued strong high cost progress in H2.”

“We continue to target combustible gross margin expansion organically and in dollar term for the year despite slower pricing and weaker volume in H2.”

“We expect strong margin to continue in H2, albeit without the device year on year comparison benefit, as we also further expand the presence of Illuma Eye across markets and bonds in Indonesia.”

“For smoke-free products, we anticipate continued double-digit volume growth in H2 including the expected reversal of H1 phasing benefit on IQOS.”

“As a testament to the resilience of our combustible model, we are still targeting combustible gross profit growth in H2.”

“This includes a forecast decline of 3% to 4% in H2 against the high prior year comparison I mentioned with Turkey accounting for close to half of the decline.”

“We expect gradual recoveries for the remainder of the year, though two year on year comparison are still likely to be affected.”

“As mentioned last quarter, I our H1 shipments include a Q1 shipment timing benefit of around one billion units which we expect to reverse in the fourth quarter.”

“We expect strong smoke-free momentum to continue in H2, while we factor in the exceptional H2 prior comparison notably on growing combustible volumes, and certain timing factors.”

“The fact that we believe we are going to be back to what we think is a long term trend for the combustible business, which is a low single digit decrease.”

“We are well on track to meet or exceed our three year target targets demonstrating our ability to deliver what we believe to be best in class CPG growth.”

“With regard to our balance sheet, we continue to target further deleveraging in 2025. Placing us on track for an our target ratio of around two times by the end of 2026.”

“We are still hoping for an approval in H2, but we are also at the same time acknowledging the fact that the agenda and the workload for the FDA is is is very heavy. And therefore, it is clear that we don't have a certainty that we will give we will get this PMTA in twenty five. And and and and that could move, of course, to twenty twenty six.”

“And we think there could be some adjustment on the volume year and there in q three. So that can impact the q three performance.”

“While the situation is volatile, we do not currently anticipate anticipate a material impact on our business from recently introduced or discussed tariffs.”

“However, given cigarette dynamic, it is possible that H2 may see modest decline for total PMI volumes.”

“And this is also likely to extend into H2.”

“we have great confidence in sustainable, adjustable EPS growth in both currency-neutral and dollar terms.”

“While it is early in the year and there are a number of uncertainties in the global economic outlook, we remain confident that we will achieve another year of super growth.”

“So we are raising the guidance for the volume for ZYN in the US by on average 20 million cans.”

“We believe that the impact will be lower in H2 as we go through annualization. And therefore, we expect in H2 an acceleration, as I mentioned, in the IMS growth in the second half in Europe.”

“So yes, we are saying that we expect to be well positioned versus the overall bracket for the year in terms of revenue growth. We expect to be a bit above on OI.”

“We believe that the difference through 2025 should stay between smoke-free and combustible. I'm not saying it's going to stay exactly at the same level, but we're going to keep a very material difference between the two, and we're going to continue to benefit from this quality of mix effect.”

“For U.S. ZYN, we expect shipment to be at a similar level to Q1, as trade restocking continues and offtake gradually accelerates.”

“As announced in this morning's press release, we are raising our 2025 adjusted diluted EPS forecast to $7.36 to $7.49.”

“We also continue to expect total semi-organic net revenue growth in the range of plus 6% to plus 8%, organic operating income growth of plus 10.5% to plus 12.5%, and currency-neutral adjusted diluted EPS growth of plus 10.5% to plus 12.5%.”

“This further supports our forecast of plus 12% to plus 14% SFP shipment growth, which incorporates unchanged strong growth assumptions for IQOS.”

“While the situation is volatile, we do not currently anticipate a material impact on our business from recently introduced or discussed tariffs.”

“With less favorable dynamics in H2, we continue to expect truly combustible pricing of plus 5% to plus 6%.”

“We continue to expect an impact of around 1 billion units in 2025, primarily due to annualization with only Hungary and Slovakia implementing the ban so far this year.”

“Overall, regional Q1 adjusted IMS growth was in line with our expectations and we expect another robust quarter in Q2 followed by an acceleration in the second half.”

“We expect double-digit progress in the balance of the year in line with our target of plus 10% to plus 12% growth.”

“As we continue to invest in top-line growth, we target organic SG&A growth broadly in line with net revenue growth for the year.”

“We believe our growth profile is best-in-class within large-cap consumer goods, as shown by our three-year CAGR target, which we are well on track to meet or exceed.”

“With regard to our balance sheet, delivery remains a key priority, and we continue to target further reduction in 2025, placing us on track for our target ratio of around two times by the end of 2026.”

“After more than $750 million of savings in 2024, this places us nicely on track to achieve our $2 billion target over 2024-2026.”

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

“But, you know, the way we organize our supply chain as you know, US on the ZYN is essentially self sufficient. Our supply chains in Europe I mean, we organized our supply chain almost by blocks, so I don't see at this at this stage that they should be on a surprises coming on the tariff side.”

“You know, second half of the twenty five, we should start seeing we should start seeing improvement on this”

“For the first quarter of 2025, we expect a strong start to the year with net revenue and operating income growth growing in line with our full year objective despite the leap year comparison.”

“we expect the continuation of strong momentum with the absolute growth in HPU adjusted IMS volume expected to be at a similar level to 2024, translating”

“We continue to target around nine hundred million tons of for the full year from our Kensington facility”

“We do not assume any significant volume from US IQOS before the at the launch of IQOS Illumina.”

“We expect continued strong momentum in 2025. And we remain confident in our ability to deliver our our twenty twenty four, twenty twenty six growth target as we progress towards our ambition of becoming substantially smarter by twenty thirty”

“Importantly, we're also well on track to deliver high single digit adjusted diluted EPS growth in dollar term across the twenty twenty four, twenty twenty six period after any”

“These are our 2024 delivery and 2025 outlook, we are well positioned to meet or exceed all metrics of the twenty four, twenty six target targets presented at our twenty twenty two investigate.”

“So we could have indeed a gap that could continue to expand between smoke free product and and combustible in the in the coming years.”

“As you know, we were facing until now a significant headwind on cost, notably on the combustible business. This is easing. Twenty five should be better. And twenty six could be even better than than twenty five, by the way.”

“I believe US will go in the similar path as had on a heat not burning in other places. So two to three years, we should I could should be net net contributor to to the bottom line.”

“We expect further progress in twenty twenty five placing us on track for our target ratio of around two times by the end of twenty twenty six.”

“While we continue to target gross margin expansion in combustible, we expect this gap to grow over time as we continue to drive profitable growth from smoke-free product, investing in new market Brand building.”

“In future, we may benefit from Airbnb's dividend income but we do not include any impact in our 2025 forecast at this time.”

“We are well set to meet our full-year objective of expansion on both bases.”

“On ZYN, Bonnie, we said somewhere in Q4, we will have the supply to the market, meeting consumer demand, which to clarify again, doesn't mean that we will have fully been replenishing all level of inventory.”

“And in Q4, we're going to be with more equalization because we're going to be facing two elements. The first one, regarding the Red Sea disruption, we're going to have some reversal in Q4, so that will play negatively on the shipment.”

“Our expectations for strong operating cash flow of around $11 billion for the year are unchanged, and factoring in the most recent currency moves we now target a 0.3 times to 0.4times improvement in our net debt to adjusted EBITDA ratio in 2024.”

“Q4 net financing costs are likely to be sequentially higher, notably given the mark-to-market benefit in Q3 from the volatility in interest rate markets I mentioned earlier.”

“We also target another quarter of adjusted gross and operating margin expansion, including a planned increase in commercial investments behind our smoke-free brands.”

“As reflected in this forecast we expect another robust delivery in Q4, despite a more challenging top-line comparison on the mix of shipments between categories.”

“On a U.S. dollar basis, this forecast represents very robust growth of approximately +7% to +8%.”

“This translates into a range of $6.45 to $6.51, including an unfavorable currency impact of $0.40 for the year at prevailing rates.”

“Accordingly, we are raising our forecast for currency-neutral adjusted diluted EPS growth to +14% to +15%, which also factors in lower-than-anticipated net financing costs, including higher interest income.”

“We continue to target adjusted gross margin expansion for both smoke-free products and combustibles, and adjusted OI margin expansion for total PMI, all in both organic and dollar terms.”

“With the impact of this improved top-line performance, coupled with IQOS and ZYN operating leverage and further cost efficiencies, we now also raise our forecast adjusted organic OI growth to +14% to +14.5% for the year.”

“This includes strong double-digit organic growth in smoke-free net revenue and should result in close to $15 billion in total for the year.”

“Given the combination of stronger volumes with accelerated pricing and continued smoke-free mix, we are increasing our forecast organic net revenue growth to around +9.5%.”

“For U.S. ZYN we forecast shipment volumes at the upper end of our prior guidance, in the range of 570 million cans to 580 million cans, reflecting the progress made on capacity expansion as well as continued strong demand.”

“This forecast continues to assume an impact from the EU characterizing flavor ban of just over 2 billion units and no volumes in Taiwan, where we continue to await regulatory approval.”

“Within this, we continue to expect adjusted IMS HTU volume growth of around +13% and shipment volumes of around 140 billion.”

“First to volumes, where we target record organic growth and increase our outlook to +2% to +3% total shipment progression.”

“Additionally, we are progressing with the Alliance for Water Stewardship standard, certifying one additional factory year-to-date to place us at 86% against our goal of 100% by 2025.”

“We estimate reconsolidation would be incremental to PMI's cash and cash equivalent, cash flow and adjusted EBITDA, adjusted operating income, and adjusted EPS numbers.”

“With better-than-expected pricing of +8.8% on a year-to-date basis, we now forecast full-year pricing of +8 to +9%.”

“As we disclosed in September, we have entered into an agreement to sell Vectura Group and expect the transaction to close by the end of the year.”

“The learnings from these pilots in Austin and other cities will be used to fine-tune our approach in anticipation of the at-scale launch of IQOS ILUMA, where we continue to assume an FDA authorization in H2, 2025.”

“We do not anticipate any commercial volumes in 2024.”

“With ongoing efforts to increase our U.S. production capacity to around 900 million cans for the full year of 2025, and significant expansion beyond 2025 from our planned new facility in Colorado, we believe we are well positioned to capture ZYN's potential over the coming years.”

“We continue to expect shipments to match consumer demand at some point during the fourth quarter.”

“We expect further strong growth in Q4.”

“As previously communicated, we target an organic increase in SG&A below the rate of net revenue growth for the year, while still supporting our smoke-free expansion with continued commercial investment.”

“We continue to target combustible gross margin expansion for the year in organic and dollar terms as cost pressures, including the impact of the EU single-use plastics directive, are more than offset by pricing and ongoing cost initiatives.”

“Nevertheless, don't take the 8% to 9% as the guidance for the future. We always said that we were more mid-single digits on the medium term.”

“This places us well on track for our target ratio of around two times by the end of 2026, with buybacks to be considered, subject to Board approval, once we are within sight of this goal.”

“While only the first year, we are progressing nicely towards our 2024-2026 target of $2 billion in gross savings.”

“And we should see less headwind on cost of goods, which is probably good for the combustible cigarette profitability.”

“Look, I'm confirming that we have the objective to be around 900 million can of production capacity for next year, that's for the full year 2025.”

“This puts us firmly on track for an exceptional 2024 with accelerated top line growth and margin expansion.”

“Last, we continue to target 0.3x to 0.5x improvement in our net debt to adjusted EBITDA ratio in 2024, driven by profit growth and strong cash flow generation.”

“As shown by the increase in our forecast U.S. EPS growth to plus 5% to plus 7%, the underlying strength of our business and proactive mitigating actions have allowed us to more-than-compensate for this, and we expect to deliver on our objective of strong growth in dollar terms.”

“This translates into a range of $6.33 to $6.45 including an unfavorable currency impact of $0.34 for the year at prevailing rates.”

“We continue to target adjusted gross margin expansion for both smoke-free product and combustible, and adjusted OI margin expansion for total PMI, all in both organic and dollar terms.”

“We continue to target close to $15 billion in smoke-free net revenue for the year.”

“But I would say, globally, we expect more acceleration on all the markets that have been going through the flavor ban.”

“And Italy will be part of the market where we expect improvement.”

“And we expect Europe to accelerate as we are transitioning out of this phase of adjustment to the flavor ban.”

“And now when we are looking at the second half, so we expect outside Europe situation to continue to do well.”

“We expect this improvement to more than offset an increase in capital expenditure to around $1.3 billion to $1.4 billion as we further accelerate ZYN capacity expansion.”

“Given expectation for a strong full year profit delivery, we are forecasting operating cash flow of around $11 billion which is at the upper end of our previous forecast range at prevailing exchange rate and subject to year-end working capital requirement.”

“This is in contrast to a forecast currency tailwind of $0.04 for H2 overall, which enables us to target accelerated U. S. dollar adjusted diluted EPS growth.”

“On a global basis, our leadership in combustible is a critical enabler to maximize switching to smoke-free product, and we target a stable category share over time.”

“Further market launches are planned in H2 including DELIA and LEVIA HTUs and the new ILUMA i device range which is currently only available in Japan.”

“We expect the ongoing expansion of the existing facility in Kentucky to provide around 900 million cans of capacity for 2025.”

“Importantly, we expect a very strong H2 delivery in adjusted IMS on both sequential and year-on-year basis to between plus 14% and plus 15% growth.”

“However, we see an incremental headwind of around 2 billion units to our full year adjusted IMS forecasts, the majority of which is driven by the ongoing delay in approval for commercialization in Taiwan, which was previously expected around the midpoint of the year.”

“Indeed, despite an uncertain outlook in Ukraine, we anticipate an acceleration in Europe adjusted IMS growth in the second half.”

“With a range of important commercial activities in Q3, we expect SG&A to remain elevated but continue to target an organic increase below the rate of net revenue growth for the year.”

“We expect this dynamic to be less impactful in 2024 than last year.”

“We also expect convertible gross margin expansion in H2.”

“This represents good progress towards our target of around 2x by the end of 2026.”

“We expect an acceleration in H2 savings, notably from manufacturing, as we progress towards our $2 billion target for '24, '26 period.”

“We continue to assume an authorization from the FDA in the second half of 2025.”

“We intend to reconsider share repurchase subject to board approval once we are within sight of this goal.”

“we have in Q1 actually $0.06 coming from the Egyptian pound that won't be there next year.”

“this exceptional start to the year sets the stage for us to deliver significantly better-than- expected 2024 currency-neutral growth, and robust growth in U.S. dollar at prevailing rates.”

“Today, we have no reason to believe that suddenly Russia is going to become a growth market, because nothing has changed fundamentally.”

“So we believe that we can increase price more low single digits or not at the level of combustible on is not burn.”

“We have this outlook of moving into positive bottom line for VEEV in the second part of the year, which would be very good news.”

“We are working on the result. We are making a number of adjustments and will come with a detailed plan in the coming quarters.”

“And as I said, we expect even a further acceleration in the second part of the year.”

“With increased liquidity in the Egyptian pounds, we are now reducing our balance sheet exposure, and this should be complete in the coming weeks.”

“But we want to deliver robust growth in dollar terms.”

“So that will also reverse partially in the rest of the year as we are coming with some phasing on commercial actions and marketing, advertising later in the year and starting in Q2, where we will have more SG&A.”

“So that has been a plus in Q1, and we expect that to reverse later in the year for the time being.”

“We continue to target a 0.3x to 0.5x improvement in our net debt to adjusted EBITDA ratio in 2024, driven by profit growth and strong cash flow generation.”

“After the excellent Q1 performance, we expect a strong H1 overall with organic net revenue and OI growth around the high end of our full year ranges.”

“We expect full-year gross and OI margin expansion, in both organic and dollar terms, at prevailing exchange rates.”

“In addition to higher revenue growth, we expect accelerated organic margin expansion.”

“We continue to target strong growth in both adjusted IMS and shipments of IQOS HTUs, and to reach close to $15 billion in 2024 smoke-free net revenues at prevailing exchange rates.”

“we expect the structural growth of IQOS to fuel continued HTU progression over the rest of the year.”

“We expect higher organic SG&A increases in the remainder of 2024, notably reflecting investment spend phasing, which was favorable in Q1.”

“As previously flagged, cost increases in leaf, wages and certain other inputs carried over into 2024, and these should ease next year.”

“We continue to target plus 14% to plus 16% adjusted IMS growth for the year, with around plus 10% growth in Q2 followed by an H2 acceleration driven by the timing of commercial programs, ILUMA uptake, newer markets and a less demanding prior year comparison.”

“Our 2024 outlook places us firmly on track to deliver our 2024-2026 CAGR targets.”

“We also continue to target reaching around 2x by the end of 2026 and will consider buybacks once confirmed we are on-track.”

“As previously flagged, our 2023 share of segment was flattered by competitor supply constraints in Egypt which may normalize this year.”

“The incremental phasing impact was around 1 billion units and was primarily related to Red Sea disruption. While uncertain, we assume this will normalize in the second half of the year.”

“And I think every incremental IQOS and every incremental ZYN is obviously requires proportionally less of the investment with the first IQOS and the first ZYN. So, I mean, the scale offer is going forward, there's opportunity for supporting the margin.”

“And I think, especially on the combustible, I -- we assume that the 2024 is sort of the last year of this extra ordinary life of inflation under pressure. And as of 2025, in other words, we should start seeing easing when the COGS pressures, and this is about delivering some other materials.”

“So right now, if we roll this forward to 2024, I think that Japan is on the good momentum. ZYN in the U.S. continues this momentum. Europe is going very strongly very well.”

“This forecast includes notable capability investments in the U.S., but as mentioned at Investor Day we still expect to deliver strong double-digit operating income growth in this market.”

“We do not expect a meaningful change in the structural trajectory of the category, and indeed expect Europe adjusted IMS progression to be broadly in line with the group growth rate in 2024.”

“We expect ILUMA to drive continued strong IQOS user growth in 2024 and beyond.”

“With smoke-free commercial costs also increasing by less than net revenues, this clearly bodes well for 2024 as we continue to benefit from scale effects and manufacturing optimization.”

“We expect 2024 to be a year of accelerated growth for smoke-free products and remain confident in our 2024-2026 growth targets.”

“We continue to target a ratio of around two times by the end of 2026, with buybacks to be considered once confirmed we are on track.”

“We target an adjusted EPS CAGR of plus 9% to 11% ex-currency growth at constant 2023 corporate tax rates, including an increase in net financing costs which skews towards the first year of the period in 2024.”

“For the next three years we target a similar strong volume delivery, a plus 6% to 8% organic net revenue CAGR, and a step-up in organic operating income growth to plus 8% to 10%.”

“We target an additional $2 billion over the next three years.”

“We believe this is more representative of the underlying momentum of our business, and in line with our 2024/2026 CAGR target range of plus 8% to 10%.”

“With the growth of ZYN surpassing our expectations, we now expect to achieve this well ahead of time.”

“We aim to reach 60 markets by 2030, driving our ambition to exceed two-thirds of group net revenues.”

“We remain on track to file for IQOS ILUMA's PMTA and MRTPA this months.”

“you should expect certainly a continuation of a significant level of investment as we are accompanying the growth of our star product, IQOS and ZYN. That should probably mean quarter-on-quarter, I would say, sequential increase and still a significant growth versus last year.”

“today we are seeing this around stability situation for our OI margin year-on-year organically for Q4.”

“there are going to be some mix impact in Q4 and notably on the devices as we are rolling out ILUMA in a significant number of new markets... that is having a negative impact on the margin.”

“last year, we finished the year with a strong user growth, and we target to do the same this year.”

“when we look at Q3, what we expect for Q4, we are very much with the same strong 15% to 16% IMS growth.”

“when I look at the 2023 performance versus 2022 performance, that will mean even in the low end of the bracket, an acceleration in terms of growth versus the growth that we experienced in 2022 in terms of incremental billion of [indiscernible] being sold.”

“With better-than-expected pricing in Q3 of plus 9% and plus 8.6% year-to-date, we now forecast a full-year increase of plus 8% to plus 8.5%.”

“We continue to see a long runway of growth in Japan over the coming quarters.”

“This shift is now substantially progressed and we expect a more normalized rate of HTU shipment in Q4.”

“We expect strong IMS volume growth to continue in Q4, with a corresponding increase in market share.”

“Also, as in prior years, we expect a substantial acceleration in user growth in the fourth quarter.”

“We expect ZYN to enhance this further as it starts to be included in our organic metrics from mid-Q4.”

“This includes the expectation of higher device sales as we accelerate our ILUMA rollout to reach around 50 markets by year end, complemented by further ILUMA device innovation.”

“For Q4, we expect strong operating income growth with broadly stable year-on-year organic margin provision.”

“For the full-year, our expectation remains that organic margin evolution will be towards the lower-end of our minus 50 basis point to minus 150 basis point range, including the expected technical margin impact of around 40 basis points from third-party arrangement in Indonesia and Ukraine.”

“In H2, we expect strong organic operating income growth of around 10%.”

“First, we expect an accelerated H2 top line with organic growth of around plus 9%.”

“we continue to expect operating cash flow of around $10 billion for the year.”

“translate into a full-year range of $6.05 to $6.08, including an estimated unfavorable currency impact of $0.53 at prevailing rates.”

“allows us to raise our currency neutral adjusted diluted EPS growth forecast to plus 10% to plus 10.5%.”

“we expect excellent organic OI growth over the second half of the year.”

“we are narrowing our organic net revenue growth forecast to around plus 8%, the midpoint of our previous range.”

“we are now increasing our full year nicotine pouch forecast range to 390 million to 410 million cans.”

“For combustible, the resilience of our portfolio is reflected in an updated forecast of a 1% to 2% cigarette volume decline.”

“we expect to deliver HTU shipment volume within the lower half of our prior 125 billion to 130 billion range.”

“we are raising our volume, organic sales growth and currency neutral adjusted bottom line growth forecast. First to volumes, where we increase our outlook to plus 1%, to plus 1.5% total shipment growth for cigarettes and HTUs”

“We are confident in our 2024-2026 CAGR target of plus 6% to plus 8% organic topline growth, plus 8% to plus 10% organic operating income growth and plus 9% to plus 11% currency-neutral adjusted EPS growth.”

“We pledge to reduce this absolute Scope 3 emission by 33% by 2030, which is significant given that Scope 3 remain the most challenging aspect of any company decarbonization strategy.”

“We aim to continue this run rate, as reflected in our 2024-2026 target of an incremental $2 billion in gross savings.”

“This sets us up nicely as we focus on deleveraging towards our target of around 2 times adjusted net debt to EBITDA in 2026.”

“it's going to be difficult to see given the strength that we are seeing in the U.S. to see volume outside the U.S. showing their strengths. Now yes, it's going to add very nicely additional numbers. But again, it's not going to be huge compared to the U.S.”

“we could be at the end of the day, in fact, growing in shipments and in IMS volume more than last year.”

“All that give us the confidence that we are set for a very, very good and very strong H2 in terms of performance.”

“But clearly we expect momentum to continue super nicely on ZYN and starting Q4 that will also contribute to the organic growth.”

“The powerful trajectory of our smoke-free business gives us confidence in a strong full year performance, with excellent operating income growth.”

“As mentioned in today’s release, we are also on track for IQOS ILUMA PMTA and supplemental MRTPA submissions in Q4 2023.”

“Our strong topline and OI outlook allows us to raise our forecast for currency-neutral adjusted diluted EPS growth to 8% to 9.5%. This translates to a revised range of $6.13 to $6.22, including $0.33 from unfavorable currency at prevailing exchange rates, notably due to the Japanese yen and Russian ruble.”

“We are increasing our organic net revenue growth forecast to 7.5% to 8.5%, reflecting the continued momentum of IQOS, the resilience of our combustible business, and the ongoing excellent growth of ZYN, which we expect to contribute positively in Q4.”

“We expect to have a strong H2, both in term of shipment progression and in-market sales in Europe, back to normal.”

“We expect to certainly see an acceleration of productivity, reduction in the weight in the second part of the year, and that will have a positive impact on margin evolution.”

“When we look towards 2024, we believe that the growth drivers are going to stay the same.”

“It's going to start to kick in in Q4 and we expect to have another nice positive.”

“We said it in the beginning, we expect a positive contribution on margin evolution for the year from the IQOS business.”

“We knew that inflation would still be there for the rest of the year, although in the second part of the year, we are going to be facing comparison where inflation was starting to kick in, so that's going to have some impact.”

“Our goal is to conduct comprehensive human rights impact assessments in our 10 highest risk markets by the end of 2025.”

“While these elements will postpone the achievement of our 2025 aspiration to reach over $1 billion of net revenues from Wellness and Healthcare products, they will result in a corresponding decrease in the level of investment in 2024.”

“We are now preparing for the launch of - re-launch of ZYN in several markets.”

“The learnings from these markets will be integrated as we roll out more broadly, starting next year.”

“We launched ILUMA in six markets in Q2, and with HTU manufacturing constraints now normalized, we aim to be present in around 50 markets by the end of the year.”

“While short-term volatility is possible, we do not expect a significant change in the structural growth of the category.”

“We expect robust growth in HTU shipments, adjusted in-market sales, and overall region organic net revenues in the second half.”

“While we don’t expect the exceptionally strong Q2 pricing of 9.4%, which benefitted from timing factors, to be fully replicated in H2, we now forecast a full-year increase of 7% to 8%.”

“Looking ahead to Q4, we expect notably strong reported and organic OI growth as certain inflationary impacts are annualized, and we increasingly benefit from an optimized ILUMA supply chain and consumables.”

“It also assumes around $1.2 billion in net finance costs, which includes higher interest on variable debt, partly offset by better returns on cash deposits.”

“This forecast continues to assume around $150 million for incremental investments in the US, and our Wellness and Healthcare business.”

“On top of this organic evolution, we expect Swedish Match to add around 50 basis points of accretion.”

“The full year estimated impact of these factors is around 40 basis points on our adjusted OI margin, and without this impact, we would expect to be broadly in the middle of our forecast organic margin range.”

“We expect strong organic operating income growth in the remainder of the year to support H2 margin expansion despite the headwinds previously mentioned and certain technical impacts.”

“As part of this growth, we are reiterating our targeted HTU shipment range of $125 billion to $132 billion, while we expect a cigarette volume decline of 1.5% to 2.5%.”

“In 2023, we expect to grow total volumes for the third year in a row, even before factoring in the excellent progress of Swedish Match’s portfolio.”