Recently, Philip Morris International (PMI) released its fourth-quarter and full-year 2024 financial report, showcasing its strong performance in the tobacco market and the results of its strategic transformation. The outstanding performance of its smoke-free product business has injected powerful momentum into the company’s development. This article will delve into PMI’s 2024 financial performance, the market performance of its smoke-free products, and future prospects, providing valuable insights for vape industry professionals.

I. Impressive Financial Data, Witnessing Growth Strength

From the overall financial data, PMI’s performance in 2024 is commendable. Full-year net revenue reached 37.9billion∗∗,ayear−on−yearincreaseof∗∗7.737.9billion∗∗,ayear−on−yearincreaseof∗∗7.724.5 billion, up 10.2%; operating income was 13.4billion∗∗,asignificantincreaseof∗∗16.013.4billion∗∗,asignificantincreaseof∗∗16.09.71 billion, surpassing market expectations of 9.44billion∗∗,comparedto∗∗9.44billion∗∗,comparedto∗∗9.05 billion in the same period last year. Such achievements are particularly outstanding in the highly competitive tobacco market.

II. The Rise of Smoke-Free Business, Core Driver of Growth

(1) Volume Growth

Total volume in the fourth quarter increased by 2.3% to 193.1 billion units, with heated tobacco unit volume rising 5.1% to 35.7 billion sticks and oral nicotine product volume growing 22.0% to 4.6 billion pouches. Smoke-free products accounted for 40% of revenue, approximately 42% of gross profit, and 20.9% of total volume. The combined units (sticks and pouches) of smoke-free products exceeded 40 billion for the first time in a quarter and have been launched in 95 markets.

For the full year of 2024, total volume grew 2.9% to 774 billion units (cigarettes and heated tobacco sticks), with heated tobacco products up 11.6% and oral nicotine products up 24.6%.

(2) Expanding User Base

By the end of 2024, smoke-free products had an estimated 38.6 million adult users, an increase of 5.3 million from December 2023, reflecting market recognition of its products.

III. Excellent Performance Across Smoke-Free Categories

(1) IQOS Global Performance

IQOS continues to be the second-largest nicotine “brand” in existing markets (total cigarette and HTU industry volume grew 0.7% in the fourth quarter). In Japan, the adjusted market share in the fourth quarter increased by 3.1% to 30.6%, with shipment volume up approximately 13% year-on-year. In Europe, the adjusted market share grew 0.9% to 10.6%. Full-year adjusted shipment volume is expected to grow 9.4%, with significant growth in markets such as Spain, Bulgaria, Romania, Greece, and Germany. In other regions, IQOS shipment volume also saw notable growth in cities like Riyadh, Kuala Lumpur, Jakarta, and Mexico City.

(2) The Rise of VEEV E-Cigarettes

VEEV is a key component of IQOS’s multi-category strategy. It ranks among the top three in 13 European markets and leads in 5 markets, with annual shipment volume more than doubling compared to 2023.

(3) ZYN Nicotine Pouches’ Success in the US

ZYN’s strong performance in the US drove growth, with fourth-quarter shipment volume up 42% to nearly 165 million cans. Shipment volume outside the US more than doubled, with significant contributions from Pakistan, South Africa, the UK, and Mexico. PMI’s nicotine pouches are now available in 37 markets, including recent launches in Italy, Romania, and Thailand.

IV. Stable Traditional Tobacco Business

In 2024, the traditional tobacco business also remained stable. Full-year net revenue grew 4.0% (organic growth of 5.9%), while fourth-quarter net revenue increased 6.0% (organic growth of 6.2%), with further gains in brand market share.

V. Market Outlook

PMI’s smoke-free products have gained high acceptance in multiple markets but face regulatory challenges, such as the EU flavor ban, which is expected to result in revenue losses. However, PMI is addressing these challenges through technological innovation and market strategies. It expects smoke-free product shipment volume to grow 12%-14% in 2025, driving total shipment volume growth of approximately 2%; full-year net revenue growth of 6%-8%; and operating income growth of 10.5%-12.5%.

PMI CEO Jacek Olczak stated, “2024 was an extraordinary year for PMI. We delivered a very strong full-year performance, driven by the continued growth of IQOS and ZYN, as well as robust combustible performance.”

“Currently, the FDA has approved all our ZYN nicotine pouches for sale in the US, further demonstrating the compelling scientific basis supporting novel tobacco products. We hope our other pending FDA applications will be expedited. We also hope other countries will follow our lead and adopt effective tobacco harm reduction measures. This is especially important in places where novel tobacco products are banned, as they lead to the continued consumption of combustible cigarettes.”

“With strong momentum across all categories, we believe our smoke-free transformation and brand portfolio will continue to deliver outstanding performance and create value for our shareholders in 2025 and beyond.”