(Alliance News) - Philip Morris International Inc on Wednesday reported higher first-quarter revenue and operating profit, though earnings declined due to a fair value adjustment, as it guided for full-year growth.

The Stamford, Connecticut-based tobacco group said net revenue rose 9.1% to USD10.15 billion in the first quarter of 2026 from USD9.30 billion a year prior.

Operating income increased 9.8% to USD3.89 billion from USD3.54 billion.

However, diluted earnings per share fell 9.3% to USD1.56 from USD1.72, which the company attributed to a non-cash fair value adjustment related to its minority shareholding in India.

Adjusted diluted EPS rose 16% to USD1.96.

Chief Executive Officer Jacek Olczak said: "Our performance exceeded our expectations in the first quarter, with an outstanding delivery from IQOS driving very good growth for the group against a strong prior-year comparison."

The company said growth was driven by its smoke-free products business, where revenue increased 25% and accounted for 43% of total net revenue.

IQOS continued to be the main growth driver, with shipment volume rising 11% and strong performance across Europe, Japan and emerging markets.

In contrast, combustible product volumes fell 5.1%, though revenue from the segment rose 6.8% due to pricing.

Philip Morris said the conflict in the Middle East had a limited impact during the quarter, affecting shipments to global travel retail and certain regional markets.

"The Middle East conflict had a small impact on our business in the first quarter, which affected shipments to Global Travel Retail and certain markets in the region for both combustibles and HTUs," the company said.

Looking ahead, Philip Morris forecast full-year 2026 diluted EPS between USD7.56 and USD7.71, compared with USD7.26 in 2025.

Adjusted diluted EPS is expected to rise between 10.9% and 12.9% year-on-year, or between 7.5% and 9.5% excluding currency effects.

The company said it does not assume a prolonged impact from the Middle East conflict in its outlook, though it has factored in higher transport, energy and input costs.

"We will continue to closely monitor developments to assess the mid-to-long term consequences across the main variables," it said.

Shares in Phillip Morris were up 1.7% at USD155.85 in New York during pre-market trading on Wednesday.

By Eva Castanedo, Alliance News reporter

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