Matt Smith's questions to Philip Morris International (PM) leadership • Q3 2025
Question
Matt Smith from Stifel asked for clarification on the U.S. ZYN business's expected 'best-in-class' margin structure, specifically whether the $100 million Q3 investment was a sustained or normalized level. He also inquired about the specific drivers behind the anticipated single-digit operating profit growth in Q4, including inventory timing, U.S. investment levels, and other factors.
Answer
Emmanuel Babeau, CFO, clarified that the $100 million investment in Q3 for ZYN was a one-off, non-repeatable expense. He affirmed that ZYN is expected to maintain best-in-class margins within the group, even with a new, higher 'normal' level of promotional activity compared to H1. Regarding Q4 operating income growth, he explained that while underlying business momentum remains strong, the slower growth is due to inventory adjustments for IQOS and ZYN, less favorable combustible price increases due to phasing, continued significant investment, and a substantially higher tax rate expected in Q4 to reach 22% for the full year.