Travel retail was among Philip Morris International’s (PMI) strongest-performing channels for smoke-free products in the three months to 30 June, the company has reported.
Group-wide, Q2 net revenues increased by +10.4% year-on-year (+7.6% organically) to US$11.2 billion, with both the smoke-free (up by +11.7%, +9.7% organically) and combustibles (up by +9.5%, +6.1% organically) businesses contributing positively.
According to company data, PMI Global Travel Retail (airports where IQOS is available) reached a 21.5% heated tobacco share in Q2 2026, representing a +3.1 percentage point increase compared to a year earlier (see chart above). This marks the largest year-on-year share gain among the top ten IQOS markets worldwide.
The performance reinforces travel retail’s strategic role in driving PMI’s smoke-free transformation, providing a key platform to introduce legal-age nicotine users to the company’s portfolio of science-backed smoke-free alternatives.
During the first half of 2026, smoke-free products accounted for 42% of total PMI net revenues. The company’s smoke-free portfolio is now available in 109 markets, with IQOS represented in 80 and ZYN in 60.
Gross profit in Q2 increased by +11.5% reported, +8.7% organic, while operating income increased by +22% reported and +10.7% on an organic basis.
Total shipment volumes rose by +2.5% during the quarter, driven by a +7.5% increase in smoke-free product shipments. This was led by IQOS, alongside resilient combustible performance in markets where smoke-free products are prohibited or have limited market penetration.
Performance by segment
The Smoke-Free Products (SFP) segment remained the principal driver of group performance in the quarter.
Net revenues for the division increased by +14.2% reported (+11.8% organically), while shipment volumes grew by +8.0%. Gross profit increased by +17.1% reported (+14.6% organically). According to PMI, this reflects increased scale, pricing and the growing profitability of the company’s smoke-free portfolio.
IQOS continued to underpin SFP growth, with shipment volumes increasing by +7.6% and sales volumes rising by +5.1%. IQOS continues to lead the growth of the global heat-not-burn category, in which PMI holds around three-quarters global volume share.
Modern oral nicotine pouch volumes increased by +14.7% organically. The company’s VEEV e-vapour brand recorded shipment growth of +55.1% and maintained its position as Europe’s leading closed-pod system.
Growth maintained in first half
For the first six months of 2026, PMI reported organic net revenue growth of +5.3% and organic operating income growth of +6.1%.
Within the SFP segment, shipment volumes increased by +9.9%, driven by Taiwan, Italy and Global Travel Retail, while organic net revenues rose by +13.7%.
Net revenues for the International Combustibles segment grew by +3.8% on an organic basis in the first half.
Outlook
The company projects organic net revenue growth of +5% to +7% for the full year, with investment continuing to focus predominantly on the smoke-free business. PMI projects organic operating income growth of +7% to +9%.
PMI’s outlook assumes broadly stable to slightly growing total cigarette and smoke-free shipment volumes and high single-digit growth in smoke-free shipments.
PMI added that the conflict in the Middle East has so far had only a limited impact on its business, mainly through higher transport, energy and input costs. The company said it is not currently anticipating a prolonged effect on consumer demand or the broader operating environment.
PMI Group CEO Jacek Olczak said, “We delivered outstanding results in the second quarter, driving net revenues to over US$11 billion for the first time with excellent growth across all headline metrics.
“With a robust first half under our belt, including continued momentum and strong results in our smoke-free business, we are well positioned to deliver on our full-year targets while investing for future growth.” ✈
