June 2 - Philip Morris reduced its 2026 profit outlook on Tuesday, attributing the revision to margin pressures from higher energy costs tied to the Iran conflict, currency swings and a backdrop of tightened consumer spending.
Speaking at the Deutsche Bank global consumer conference, CEO Jacek Olczak said the company faces cost headwinds that are squeezing margins, although management believes it can offset some of those impacts. Olczak cautioned, however, that in a more competitive environment price increases are "not always fully absorbed" by consumers.
The company now projects 2026 adjusted earnings per share of $8.31 to $8.46, which represents growth of 10.2% to 12.2% from 2025 levels but is slightly below the prior guidance range of $8.36 to $8.51. Analysts had been modeling $8.41 per share.
Olczak also discussed regulatory developments in the United States, calling recent U.S. FDA moves to relax enforcement on unauthorized vaping products and nicotine pouches a "net positive." He said the change reduces regulatory uncertainty around the Zyn brand and should help category growth.
To improve competitiveness within its oral nicotine portfolio, the company said its newly released Zyn Ultra will be priced at a lower cost per pouch than its flagship range. Management described the move as intended to reduce Zyn's steep price premium and bolster its position in a more price-sensitive market.
The company had already lowered its 2026 adjusted profit forecast in April amid regulatory uncertainty around Zyn and rising competition across tobacco products. Philip Morris continues to expand its smoke-free offerings across multiple categories, including its heated tobacco device IQOS, vaping products and oral nicotine pouches.
Philip Morris noted that recent price increases in Japan, driven by excise tax changes, have weighed on category growth there, but so far those moves "have not materially hurt" its market share. Shares of the tobacco company were down about 1% before the opening bell on the day of the announcement.
Corporate positioning and product strategy
- Management is attempting to manage cost pressures while protecting market position across smoke-free categories.
- The Zyn Ultra pricing change is aimed at narrowing a price premium and improving competitiveness in oral nicotine pouches.
- Regulatory shifts in the U.S. around enforcement of unauthorized vaping and nicotine pouches reduce a stated source of uncertainty for Zyn.