The global tobacco landscape is in a state of major transformation. As traditional combustible cigarette sales face pressure, the industry’s titans—Philip Morris International, British American Tobacco, Japan Tobacco, and Imperial Brands—are pivoting aggressively toward smoke-free alternatives. These next-generation products, including heated tobacco, vapes, and nicotine pouches, are reshaping revenue streams and defining the future of the market.
This post offers a comprehensive look at the recent financial performance of these four multinational giants. We’ll analyze their revenue growth, profit margins, and the strategic shifts driving their results. Whether you’re an investor, industry analyst, or just curious about the state of Big Tobacco, this breakdown provides a clear picture of who’s winning and how.
Philip Morris International (PMI)
Philip Morris International delivered a strong performance in the second quarter, setting a new record for net revenue. The company’s success highlights the powerful momentum of its smoke-free portfolio, which now accounts for a significant portion of its total business.
Q2 Financial Highlights
- Net Revenue: Reached a record $10.14 billion, up 7.1% year-over-year.
- Operating Profit: Grew to $3.712 billion, a 7.8% increase.
- Smoke-Free Products: Shipments surged by 11.8%, with net revenue from this category climbing 15.2% and gross profit jumping 23.3%.
- Category Share: Smoke-free products now represent about 41% of PMI’s total net revenue and 42% of its total gross profit.
Smoke-Free Dominance
PMI’s smoke-free offerings are now available in 97 markets worldwide. The core of this success is IQOS, its flagship heated tobacco product, which generated over $3 billion in net revenue during the second quarter alone. This performance has solidified PMI’s leadership position, with the company holding a commanding 76% share of the global heated tobacco market.
The VEEV e-cigarette brand is also maintaining profitable growth, expanding its reach to 42 markets and securing the top spot in its category in six European countries, including Greece and Italy. In the oral products segment, shipments grew by 23.8%, driven by a more than 40% increase in nicotine pouch shipments.
Traditional and Future Outlook
While the focus is on next-gen products, PMI’s traditional combustible tobacco business remains resilient. Net revenue from combustibles increased by 2.1% in Q2, with the Marlboro brand achieving its highest quarterly market share since 2008.
Looking ahead, CEO Jacek Olczak expressed confidence, stating, “The second quarter results reflect the excellent momentum of our multi-category business.” Citing strong performance, PMI has raised its full-year guidance and projects that total shipments of cigarettes and smoke-free products will grow by approximately 1% in 2025.
British American Tobacco (BAT)
British American Tobacco reported mixed results for the first half of the year, with a slight decline in overall revenue but a significant increase in operating profit. The company is making steady progress in transitioning consumers to its new category products.
H1 Financial Highlights
- Revenue: Reached £12.07 billion, a decrease of 2.2% compared to the same period last year.
- New Category Revenue: Held steady at £1.651 billion.
- Operating Profit: Rose significantly to £5.07 billion, a 19.1% increase.
New Category and Regional Performance
BAT successfully added 1.4 million new consumers to its non-combustible products, bringing the total to 30.5 million. CEO Tadeu Marroco noted, “Our first-half performance was slightly ahead of expectations, and we are on track to meet our full-year targets.”
The company saw a positive turnaround in the U.S. market, with both revenue and profit growing for the first time since 2022. This was supported by the successful launch of the Velo Plus nicotine pouch and growth in traditional tobacco sales. Performance in Africa and the Middle East remains strong, though fiscal and regulatory policies in Bangladesh and Australia posed challenges.
Marroco emphasized the company’s strategy: “By prioritizing investment in high-profit products, we have achieved higher returns… I am confident that our current investments will drive the company’s revenue back to a growth trajectory by 2026.”
Japan Tobacco (JT)
Japan Tobacco posted strong results for the first half of the year, with several key metrics showing significant improvement over the previous year. The company’s solid performance was driven by stable pricing in its tobacco business and contributions from its acquisition of the Vector Group.
H1 Financial Highlights
- Revenue: Reached ¥1.73 trillion, a 10.5% increase.
- Core Revenue (at constant exchange rates): Grew to ¥1.72 trillion, up 14.2%.
- Operating Profit: Climbed to ¥479.9 billion, a 10.9% increase.
- Net Profit: Reached ¥319.9 billion, up 4.8%.
Upgraded Full-Year Forecast
Thanks to its robust first-half performance, JT has comprehensively upgraded its financial forecast for 2025. The company now expects:
- Revenue to grow by 6.2%.
- Operating Profit to increase by a remarkable 128.5%.
- Net Profit to surge by 175.6%.
President and CEO Masamichi Terabatake stated, “Japan Tobacco delivered a solid performance in the first half, with stable pricing power in the tobacco business and significant contributions from the Vector Group acquisition driving notable growth in operating profit.”
Imperial Brands
Imperial Brands reported positive net revenue growth for the first half of its 2025 fiscal year, crediting its “challenger” market strategy and operational improvements for the success.
H1 Financial Highlights
- Net Revenue (at constant exchange rates): Grew by 3.2%, including both traditional and new category products.
- New Category Net Revenue: Increased by 15.4%.
- New Category Operating Loss: Reduced by 14% year-over-year.
Strategic Execution
CEO Stefan Bomhard commented, “We have achieved growth across our markets, which proves the correctness of our strategy to compete as a challenger.”
In its traditional tobacco business, Imperial Brands exceeded its goal of maintaining market share by growing its total share in five priority markets by 6 percentage points. Pricing strategies successfully offset declines in sales volume.
The new categories—e-cigarettes, heated tobacco, and nicotine pouches—all gained market share and grew net revenue. This was particularly true for the Zone brand of nicotine pouches, which further increased its market share in the United States.
Bomhard added, “Our operational initiatives have delivered strong financial performance and ample cash flow, providing strong support for corporate investment and shareholder returns.” The company is advancing a £1.25 billion share buyback program and increasing its interim dividend.
The Big Picture
The latest financial reports from the world’s four largest tobacco companies paint a clear picture: the future is smoke-free. While traditional cigarettes still generate substantial revenue, the real engine of growth is now the new generation of products.
Philip Morris International stands out as the current leader in this transition, with its smoke-free portfolio already contributing over 40% of its revenue. Meanwhile, competitors like British American Tobacco, Japan Tobacco, and Imperial Brands are making strategic investments and operational pivots to catch up. For investors and consumers alike, the message is clear: the tobacco industry is undergoing a fundamental shift, and the companies that successfully navigate this change will define the market for years to come.
