Philip Morris expands 'smoke-free' ambition, updates targets

Philip Morris International (PMI) said on Thursday it aims for more than two thirds of its net revenues to come from "smoke-free" products by 2030, as the world's top tobacco company continues to shift away from cigarettes.

The Marlboro maker and the biggest tobacco firm by market value has been on a drive to overhaul its business and find new revenue streams, aiming to transform its image from a purveyor of cigarettes to one leading the drive towards healthier alternatives.

It already aims for 50 per cent of net revenues to come from "smoke-free" products like its heated tobacco device IQOS by 2025, and on Thursday expanded that target to over two thirds of net revenues by 2030.

"We see a realistic path to becoming a smoke-free company over time, and this will be achieved market-by-market," Jacek Olczak, PMI's Chief Executive Officer, said in a statement ahead of the company's investor day on Thursday.

PMI also announced new medium-term compound annual growth targets for 2024-2026, including organic net revenues of 6 per cent to 8 per cent, organic adjusted operating income of 8 per cent to 10 per cent and adjusted diluted earnings per share of 9 per cent to 11 per cent, excluding currency and assuming current corporate income taxes.

It is also targeting heated tobacco unit shipment volumes of 180 to 200 billion units by 2026 and nicotine pouch shipment volumes of 800 million to 1 billion cans, the statement continued.

It expects ZYN, its leading nicotine pouch brand acquired via the 2022 takeover of oral nicotine company Swedish Match, to drive double-digit net revenue and adjusted operating income for the company's US operations over the 2024-2026 period, including the impact of IQOS investments, it added.

PMI is expected to launch IQOS, the main focus of its investment in smoking alternatives, in the critical US market some time from next year. The roll out will require spending upfront, including on local manufacturing.

Reuters reported on Wednesday that PMI has been hiring lobbyists across a host of key US states ahead of the launch.