Shares of Philip Morris International (PM) fell 2.8% after the company released its fourth-quarter results, which largely aligned with analyst expectations. Adjusted earnings per share came in at $1.70, matching the consensus. Revenue reached $10.4 billion, slightly exceeding the projected $10.39 billion. The company's smoke-free business continues to drive growth.

PMI's smoke-free products saw an 8.5% increase in shipment volumes during Q4, while cigarette volumes declined by 2.2%. For the full year 2025, adjusted diluted EPS grew by 14.8% to $7.54. Smoke-free products now represent 41.5% of total net revenues and nearly 43% of total gross profit, signaling a shift in the tobacco industry.

Looking ahead, Philip Morris has provided fiscal year 2026 adjusted EPS guidance ranging from $8.38 to $8.53, exceeding the analyst consensus of $8.33. The company also announced new growth targets for 2026-2028. Investors are watching the company's transition to reduced-risk products, a key trend in the sector.

IQOS, PMI's heat-not-burn product, is a major player in the smoke-free market. It's the second-largest nicotine brand in markets where it's available. The company navigates evolving regulations and consumer preferences. The future of the tobacco industry hinges on these strategic shifts.