10:26 AM EDT, 07/22/2025 (MT Newswires) -- Philip Morris International ( PM ) issued a third-quarter earnings outlook below Wall Street's estimates on Tuesday, while the tobacco company's revenue in the previous three-month period fell short of expectations.

Adjusted earnings are set to come in between $2.08 and $2.13 per share for the ongoing quarter, including a foreign-exchange tailwind of $0.05 at prevailing rates. The current consensus on FactSet is for non-GAAP EPS of $2.14. The stock fell 6.9% in Tuesday trade.

The company sees combustible volume dynamics and less favorable phasing of comparisons and costs in the second half, Chief Financial Officer Emmanuel Babeau said in prepared remarks for an earnings call. Shipments of heated tobacco units, or HTUs, are pegged at 38.5 billion to 39.5 billion for the third quarter, according to Babeau.

For the June quarter, Philip Morris' ( PM ) adjusted EPS climbed to $1.91 from $1.59 the year before, surpassing the Street's view for $1.86. Revenue improved 7.1% to $10.14 billion, but missed the average analyst estimate on FactSet of $10.32 billion. On an organic basis, sales advanced 6.8% year over year.

Smoke-free net revenue and gross profit grew by 15% and 23%, respectively, amid a 12% gain in shipments, according to the company. Combustible revenue and gross profit were up 2.1% and 5%, buoyed by pricing.

The company's total shipment volume increased by 1.2% to 200.1 billion units, with oral smoke-free products jumping 24% buoyed by nicotine pouches, which grew by more than 40% in the US. Cigarette shipment volume declined 1.5% to 155.2 billion units, while heated tobacco volume inclined 9.2% to 38.8 billion units.

For the full year 2025, Philip Morris ( PM ) now anticipates adjusted EPS to be in a range of $7.43 to $7.56, up from its previous forecast of $7.36 to $7.49. The Street is looking for non-GAAP EPS of $7.50. The company maintained its organic revenue growth view of 6% to 8% for the current year.

"We expect continued strong momentum on both IQOS and ZYN, alongside robust pricing and meaningful margin improvement," Babeau said. "We expect further double-digit HTU adjusted (in-market sales) progression, with growth skewed to the fourth quarter given a strong comparison in (the third quarter)."

The guidance continues to assume a drop in international industry volume of around 1% for cigarettes and HTUs, excluding the US and China, according to Philip Morris ( PM ). Shipments of the company's cigarette and smoke-free products are projected to grow by 1%, down from its prior expectations for a 2% rise. It continues to expect smoke-free volume growth of 12% to 14%, partially offset by a 2% decline in cigarette volume.

Babeau said the company is "well-positioned" to tackle potential supply chain challenges. "While the situation is volatile, we do not currently anticipate a material impact on our business from recently introduced or discussed tariffs."

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