Philip Morris International

“Federal, state or local government action, including regulatory actions and inaction by the FDA, may have a material adverse impact on our commercialization of SFPs and in our business in the United States. The FDA’s premarket tobacco product and modified risk tobacco product authorizations of two versions of our IQOS product as well as the premarket tobacco authorizations of 20 varieties of ZYN nicotine pouches are subject to strict marketing, reporting and other requirements.”

Annual report 2025A · The company itself

“These renewal requests were received by the FDA 360 days prior to the stated July 2024 expiration date of the original exposure modification orders, as requested by the FDA in the original orders. On May 9, 2024, the FDA filed for scientific review of our MRTP renewal applications for IQOS products and posted materials from these applications. The FDA referred our MRTP renewal to the Tobacco Product Scientific Advisory Committee (“TPSAC”).”

Annual report 2025A · The company itself

“On April 30, 2025, we submitted the Annual Report for the IQOS THS to the FDA. The report included a systematic review of the literature covering publications related to the IQOS THS between March 1, 2024, and February 28, 2025.”

Annual report 2025A · The company itself

“On January 16, 2026, we submitted the first Annual Report for ZYN products to the FDA. The report included a systematic review of the literature covering publications related to ZYN products between January 16, 2025, and October 31, 2025.”

Annual report 2025A · The company itself

“In April 2024, we submitted MRTPAs for ZYN products currently marketed in the United States and requested authorization of a modified risk claim. In February 2025, the FDA formally accepted our MRTPAs and in June 2025, issued a filing letter for 20 ZYN nicotine pouch products. This action initiated a scientific review of our MRTPAs which requested the following modified risk claim: “Using ZYN instead of cigarettes puts you at a lower risk of mouth cancer, heart disease, lung cancer, stroke, emphysema, and chronic bronchitis.””

Annual report 2025A · The company itself

“PMI affiliates and Swedish Match affiliates are taking appropriate actions to address the illicit resale of certain of our oral products including nicotine pouches outside their initial intended market of retail, such as Scandinavia, the U.S. and other markets.”

Annual report 2025A · The company itself

“On July 30, 2024, PMI announced a memorandum of understanding with KT&G. This non-binding memorandum establishes the parties’ intent to collaborate on regulatory submissions for those new KT&G heat-not-burn products that PMI selects to commercialize 59 in the U.S.”

Annual report 2025A · The company itself

“In 2022, we significantly expanded our oral smokeless products portfolio with the acquisition of Swedish Match. Swedish Match's ZYN is the leading smoke-free product brand in the U.S. market.”

Annual report 2025A · The company itself

“•Since August 2020, we have launched and expanded our portfolio of vaping products (branded VEEV) in 47 markets. •Following our acquisition of Swedish Match, we have access to a strong portfolio of Swedish Match brands, and more specifically to ZYN. Modern oral pouches are currently available in 56 markets.”

Annual report 2025A · The company itself

“As of December 31, 2025, our four geographical segments were as follows: •Europe Region is headquartered in Lausanne, Switzerland, and covers all the European Union countries, Switzerland, the United Kingdom, and also Ukraine, Moldova and Southeast Europe; it also includes our Wellness business; •South and Southeast Asia, Commonwealth of Independent States, Middle East and Africa Region ("SSEA, CIS & MEA") is headquartered in Dubai, United Arab Emirates.”

Annual report 2025A · The company itself

“Our largest nicotine pouch manufacturing facility is located in the United States.”

Annual report 2025A · The company itself

“South Korea 68.0 70.5 14.0 14.0 7.5 8.3 6.5 5.7 20.6 19.9 9.5 8.1 Americas Argentina 26.8 26.4 17.0 16.4 17.0 16.4 — — 63.5 62.1 — — Mexico 30.5 31.6 17.6 18.5 17.3 18.3 0.3 0.2 57.8 58.5 1.0 0.7 (1) Market share estimates are calculated using IMS data, unless otherwise stated.”

Annual report 2025A · The company itself

“Total Currency Acqui-sitions / Dives-titures Price Vol/ Mix Cost/ Other — $ (186) $ 597 $ (13) Operating Income $ 505 $ 548 (7.8) % (0.9) % $ (43) $ (38) $ — $ (186) $ 547 $ (366) Net revenues increased by 7.1%.”

Annual report 2025A · The company itself

“On April 30, 2019, following its comprehensive assessment of our PMTA, the FDA determined that marketing a version of IQOS, namely, IQOS 2.4 and three related consumables, is appropriate for the protection of public health and authorized those products for sale in the United States.”

Annual report 2025A · The company itself

“On December 7, 2020, the FDA reached the same determination for IQOS 3.0, authorizing that version of the device for sale in the United States.”

Annual report 2025A · The company itself

“On July 7, 2020, the FDA determined that the available scientific evidence demonstrates that the issuance of an exposure modification order would be appropriate for the promotion of public health and authorized the marketing of a version of IQOS, namely IQOS 2.4 and three related consumables, as MRTP products with reduced exposure claims. On March 11, 2022, the FDA reached the same determination for the IQOS 3.0 device.”

Annual report 2025A · The company itself

“In March 2024, the FDA formally accepted our bundled PMTAs and MRTPAs.”

Annual report 2025A · The company itself

“FDA Review of Oral Tobacco and Nicotine Products: PMTAs for 20 varieties of ZYN nicotine pouches were submitted in March 2020. On January 16, 2025, the FDA determined that all 20 ZYN nicotine pouch varieties currently marketed in the U.S. met the applicable public health standard and were appropriate for the protection of public health and, therefore, authorized them for sale in the United States.”

Annual report 2025A · The company itself

“Europe - Total Industry, PMI Shipment Volume and Market Share Commentaries The estimated industry volume for cigarettes and HTUs decreased by 3.5% to 524.0 billion units, with a 5.0% decrease for cigarettes and continued HTU growth.”

Annual report 2025A · The company itself

“The report also observed that for those smokers who do not accept e-cigarettes, heat-not-burn products may offer a public health benefit despite their relative risk. The report called for a risk-proportionate regulatory environment for both e-cigarettes and heat-not-burn products and noted that e-cigarettes should remain the least taxed, cigarettes the most taxed, with heat-not-burn products falling between the two.”

Annual report 2025A · The company itself

“Currently, we estimate that illicit trade in the EU accounted for approximately 9% of total cigarette consumption in 2024.”

Annual report 2025A · The company itself

“In November 2012, the FCTC adopted the Protocol to Eliminate Illicit Trade in Tobacco Products (the “Protocol”), which includes supply chain control measures, such as licensing of manufacturers and distributors, enforcement of these control measures in free trade zones, controls on duty free and Internet channels and the implementation of tracking and tracing technologies. To date, 72 Parties, including the EU, have ratified the Protocol. The Protocol came into force in September 2018.”

Annual report 2025A · The company itself

“The tracking and tracing regulations for cigarettes and roll-your-own products manufactured or destined for the EU were extended to include tobacco products other than cigarettes, including some of our SFPs, as of May 20, 2024.”

Annual report 2025A · The company itself

“In 2025, sales to a distributor in the Europe Region and a distributor in the EA, AU & PMI GTR Region each amounted to 10 percent or more of our consolidated net revenues.”

Annual report 2025A · The company itself

“As of December 31, 2025, our smoke-free products were available for sale in 106 markets. With regard to modern oral pouches, we increased our presence to 56 markets.”

Annual report 2025A · The company itself

“As of December 31, 2025, our four geographical segments were as follows: •Europe Region is headquartered in Lausanne, Switzerland, and covers all the European Union countries, Switzerland, the United Kingdom, and also Ukraine, Moldova and Southeast Europe; it also includes our Wellness business; •South and Southeast Asia, Commonwealth of Independent States, Middle East and Africa Region ("SSEA, CIS & MEA") is headquartered in Dubai, United Arab Emirates.”

Annual report 2025A · The company itself

“As of December 31, 2025, PMI's smoke-free products were available for sale in 106 markets.”

Annual report 2025A · The company itself

“Our shipment volume (in equivalent units) decreased by 1.0% with cigarettes down by 5.5% and SFP up by 10.9%.”

Annual report 2025A · The company itself

“On March 23, 2023, the Greek Ministry of Health authorized a claim for IQOS with HEETS AMBER to inform Greek IQOS users about reduction in emissions of toxicants when using such product compared to cigarette smoking. The decision authorized the following claim: “The concentration of chemical substances with recognized toxicity produced when using IQOS with HEETS AMBER tobacco sticks is lower compared to conventional smoking.”

Annual report 2025A · The company itself

“Other Commercialization and Risk Statement Authorization Frameworks: On March 22, 2023, a bill amending the Tobacco Hazards Prevention and Control Act in Taiwan went into effect. It regulates heated tobacco products and bans e-cigarettes.”

Annual report 2025A · The company itself

“The agreement covers fifteen years, to January 29, 2038, with performance-review cycles and associated commitments, based on volume, to be confirmed for each three-year period, to allow flexibility for evolving market conditions. The agreement gives PMI continued exclusive access to KT&G’s smoke-free brands and product-innovation pipeline, including offerings for low- and middle-income markets, that will enhance PMI’s existing portfolio of smoke-free products.”

Annual report 2025A · The company itself

“In 2025, sales to a distributor in the Europe Region and a distributor in the EA, AU & PMI GTR Region each amounted to 10 percent or more of our consolidated net revenues.”

Annual report 2025A · The company itself

“As of December 31, 2025, our four geographical segments were as follows: •Europe Region is headquartered in Lausanne, Switzerland, and covers all the European Union countries, Switzerland, the United Kingdom, and also Ukraine, Moldova and Southeast Europe; it also includes our Wellness business; •South and Southeast Asia, Commonwealth of Independent States, Middle East and Africa Region ("SSEA, CIS & MEA") is headquartered in Dubai, United Arab Emirates.”

Annual report 2025A · The company itself

“Net revenues, excluding currency and acquisitions/divestitures, increased by 6.4%, mainly reflecting: a favorable price variance, predominantly driven by combustible tobacco pricing; while unfavorable cigarette mix, due to the commercial model change in Indonesia, was largely offset by higher cigarette and SFP volume.”

Annual report 2025A · The company itself

“SSEA, CIS & MEA - Total Industry, PMI Shipment Volume and Market Share Commentaries The estimated industry volume for cigarettes and HTUs increased by 1.1% to 1,562.9 billion units.”

Annual report 2025A · The company itself

“EA, AU & PMI GTR - Total Industry, PMI Shipment Volume and Market Share Commentaries The estimated industry volume for cigarettes and HTUs, excluding China, decreased by 1.1% to 316.4 billion units, with HTU growth more than offset by decrease in cigarettes.”

Annual report 2025A · The company itself

“The amendment particularly specifies that designated tobacco products (including heated tobacco products) that are not cigarettes, cut tobacco, cigars, snuff nor chewing tobacco, must undergo a health risk assessment as part of an authorization system. In July 2023, we filed an authorization request to commercialize IQOS in Taiwan pursuant to this Act. We have since received this authorization, which took effect on October 11, 2025.”

Annual report 2025A · The company itself

“We face intense competition, and our failure to compete effectively could have a material adverse effect on our profitability and results of operations.”

Annual report 2025A · The company itself

“Risks Related to Acquisitions and Divestitures We may not successfully identify, complete, or realize the benefits from strategic acquisitions, divestitures, joint ventures, or investments. From time to time, we evaluate acquisition candidates, joint ventures, or investments that may strategically fit our business objectives.”

Annual report 2025A · The company itself

“In November 2022, we acquired Swedish Match AB ("Swedish Match") – a leader in oral nicotine delivery – creating a global smoke-free combination led by the companies’ IQOS and ZYN brands.”

Annual report 2025A · The company itself

“In January 2020, we announced an agreement with KT&G, a leading tobacco and nicotine company in South Korea, for the commercialization of KT&G’s smoke-free products outside of South Korea on an exclusive basis.”

Annual report 2025A · The company itself

“Additionally, we purchase electronic devices, which are made by various electronic manufacturing services providers ("EMS"). The components used in the assembly of these devices can be made by the EMS or purchased from other suppliers. These components include mechanical parts, electrical and electromechanical components, batteries, semiconductors, and packaging materials.”

Annual report 2025A · The company itself

“Our cost of sales consists primarily of: tobacco leaf, non-tobacco raw materials, labor and manufacturing costs; shipping and handling costs; and the cost of devices produced by third-party electronics manufacturing service providers.”

Annual report 2025A · The company itself

“PMI's heat-not-burn products include licensed KT&G heat-not-burn products.”

Annual report 2025A · The company itself

“Additionally, we source the vast majority of our tobacco from a global network of farmers across multiple countries, rather than through commodity markets, which helps ensure the consistency, quality, and traceability of our tobacco supply.”

Annual report 2025A · The company itself

“Our shipment volume for cigarettes, HTUs and Oral SFP is shown in the table below: Shipment Volume Cigarettes and Heated Tobacco Units (million units) 2025 2024 2023 Cigarettes 607,367 616,827 612,949 Heated Tobacco Units 155,133 139,743 125,263 Total Cigarettes and Heated Tobacco Units 762,500 756,570 738,212 Oral SFP Volume (million cans) (1) Nicotine Pouches 879.6 644.0 421.1 Snus 227.9 239.6 240.4 Moist Snuff 129.8 134.6 133.7 Other Oral SFP (2) 2.6 3.4 4.2 Total Oral Products 1,240.0 1,021.6 799.3 (1) Excluding snuff, snuff leaf and U.S. chewing tobacco (2) Includes chew bags and tobacco bits Note: Sum may not foot due to rounding Following the deconsolidation of our Canadian subsidiary, we continue to report the volume and corresponding royalty revenues of brands sold by RBH for which other PMI subsidiaries are the trademark owners.”

Annual report 2025A · The company itself

“Our cigarettes are sold in approximately 170 markets, and in many of these markets they hold the number one or number two market share position. We have a wide range of premium, mid-price and low-price brands.”

Annual report 2025A · The company itself

“Our SFPs and commercial activities for these products are designed for, and directed toward, current adult smokers and adult users of nicotine-containing products.”

Annual report 2025A · The company itself

“Our cigarettes are sold in approximately 170 markets, and in many of these markets they hold the number one or number two market share position. We have a wide range of premium, mid-price and low-price brands.”

Annual report 2025A · The company itself

“Distribution & Sales Our main types of distribution and sales are tailored to the characteristics of each market and are often used simultaneously: •Direct sales and distribution, where we sell directly to the retailers; •Distribution through independent distributors that often distribute other fast-moving consumer goods and are responsible for distribution in a particular market; •Exclusive zonified distribution, where the dedicated multicategory product distributors are assigned to exclusive territories within a market; •Distribution through national or regional wholesalers that then supply the retail trade; •Our own e-commerce infrastructure for product sales to trade partners and to consumers; and •Our own brand retail infrastructure for our SFPs and accessories for sales to consumers.”

Annual report 2025A · The company itself

“This investment includes the building of world-class scientific assessment capabilities, notably in the areas of pre-clinical systems toxicology, clinical and behavioral research, as well as post-market studies.”

Annual report 2025A · The company itself

“Distribution & Sales Our main types of distribution and sales are tailored to the characteristics of each market and are often used simultaneously: •Direct sales and distribution, where we sell directly to the retailers; •Distribution through independent distributors that often distribute other fast-moving consumer goods and are responsible for distribution in a particular market; •Exclusive zonified distribution, where the dedicated multicategory product distributors are assigned to exclusive territories within a market; •Distribution through national or regional wholesalers that then supply the retail trade; •Our own e-commerce infrastructure for product sales to trade partners and to consumers; and •Our own brand retail infrastructure for our SFPs and accessories for sales to consumers.”

Annual report 2025A · The company itself

“With a strong foundation and significant expertise in life sciences, PMI has a long-term ambition to expand into wellness areas. The business strategy of our wellness unit, Aspeya, currently focuses on developing and commercializing primarily oral consumer wellness offerings. This includes medical and non-recreational cannabinoid products (including CBD), in line with applicable regulatory requirements, though any revenue related to cannabinoids is expected to be negligible in the near to medium term.”

Annual report 2025A · The company itself

“Consumption of tax-paid cigarettes continues to decline in many of our markets. This decline is due to multiple factors, including increased taxes and pricing, governmental actions, the diminishing social acceptance of smoking, health concerns, competition, continuing economic and geopolitical uncertainty, and the continuing prevalence of illicit products.”

Annual report 2025A · The company itself

“Governmental actions, combined with the diminishing social acceptance of smoking and private actions to restrict smoking, have resulted in reduced industry volumes for our combustible products in many of our markets, and we expect that such factors will continue to reduce combustible consumption levels and will increase down-trading and the risk of counterfeiting, contraband, illicit trade and cross-border purchases.”

Annual report 2025A · The company itself

“The financial and business performance of our smoke-free products is less predictable than our cigarette business. Our SFPs compete in relatively new categories, and the pace at which adult smokers adopt them may vary, depending on the competitive, regulatory, fiscal and cultural environment, and other factors in a specific market.”

Annual report 2025A · The company itself

“As a result of Russia’s invasion of Ukraine, certain taxing jurisdictions, including the U.S., have proposed punitive tax legislation applicable to companies doing business in Russia, which could also have a material adverse impact on our effective tax rate if enacted thereby reducing our net earnings.”

Annual report 2025A · The company itself

“The likelihood of action by the Russian government against PMI, including the possibility of legal action against us or our employees; the deprivation of rights in, or access to, our Russian or Russia-related assets; or nationalization of foreign businesses or assets (including cash reserves held in Russia and intangible assets such as trademarks), is impossible to predict.”

Annual report 2025A · The company itself

“The broader consequences of the invasion are also impossible to predict, but could include reputational consequences; further sanctions, financial or currency restrictions, punitive tax law changes, embargoes, regional instability, or geopolitical shifts; and adverse effects on macroeconomic conditions, security conditions, currency exchange rates, and financial markets.”

Annual report 2025A · The company itself

“Risks Related to our International Operations Because we have operations in numerous countries, our results may be adversely impacted by economic, regulatory and political developments, natural disasters, pandemics or conflicts.”

Annual report 2025A · The company itself

“Some of the countries in which we operate face the threat of civil unrest and can be subject to regime changes. In others, nationalization, terrorism, conflict and the threats of war or acts of war may have a significant impact on the business environment.”

Annual report 2025A · The company itself

“We do not do business or sell products in Belarus, Iran, North Korea, Cuba and Syria.”

Annual report 2025A · The company itself

“Following the start of the conflict in Ukraine on February 24, 2022, the U.S., the EU, the U.K., Switzerland, Canada, Australia, New Zealand, Singapore, South Korea, Japan and other countries introduced extensive economic sanctions and export controls in relation to Russia. While the introduced sanctions vary from jurisdiction to jurisdiction, they are largely aligned.”

Annual report 2025A · The company itself

“The U.S., the EU, Switzerland and Japan introduced additional trade restrictions banning, among many other goods, the export of certain non-tobacco materials used to produce cigarettes and heated tobacco consumables in Russia.”

Annual report 2025A · The company itself

“The U.S., the U.K., Switzerland and the EU banned the export of electric accumulators, static converters and electronic cigarettes and similar personal electric vaporizing devices, including IQOS devices, to Russia.”

Annual report 2025A · The company itself

“Governmental actions, combined with the diminishing social acceptance of smoking and private actions to restrict smoking, have resulted in reduced industry volumes for our combustible products in many of our markets, and we expect that such factors will continue to reduce combustible consumption levels and will increase down-trading and the risk of counterfeiting, contraband, illicit trade and cross-border purchases.”

Annual report 2025A · The company itself

“Additionally, while we do not now expect that the recent and currently anticipated trade tariffs imposed by the U.S. and other countries will materially impact our business, the global tariff environment is volatile and further tariff or trade related developments could result in risks to PMI’s business, including increased production costs; limited market access; supplier financial condition degradation resulting in reduced or interrupted supplies; and price increases or other economic impacts that could reduce consumer demand.”

Annual report 2025A · The company itself

“The pricing variance for 2024 and 2025 was negatively impacted by the supplemental tax surcharge on heated tobacco products ("HTPs") in Germany, which went into effect in 2022. On March 14, 2024, the Court of Justice of the European Union (the "CJEU") ruled that the German fiscal regulation imposing an additional excise tax on HTPs does not contravene EU law.”

Annual report 2025A · The company itself

“Despite this payment suspension and, in order to avoid the future addition of interest, PMI elected, on January 14, 2025, to pay the amount outstanding of EUR 721 million (approximately $751 million), excluding accrued interest.”

Annual report 2025A · The company itself

“In March 2025, Japan adopted a multi-year tax plan that included changes to its excise tax structure and rates for tobacco products. Under the plan, the excise tax for HTPs will be harmonized with cigarettes in two steps; one on April 1, 2026, and the second on October 1, 2026.”

Annual report 2025A · The company itself

“Legislation, Regulation, Taxation and Other Matters Regarding the Manufacture, Marketing, Sale and Use of Tobacco and Other Nicotine-Containing Products Fiscal Challenges Excessive and disruptive excise, sales and other tax increases and discriminatory tax structures are expected to continue to have an adverse impact on our profitability, due to lower consumption and consumer down-trading to non-premium, discount, other low-price or low-taxed products such as fine cut tobacco, illicit cigarettes or illicit SFPs.”

Annual report 2025A · The company itself

“Risk Factors — Cautionary Factors That May Affect Future Results in this report, include: •regulatory restrictions on our products, including restrictions on the packaging, marketing, registration and sale of tobacco or other nicotine-containing products or related devices that could reduce our competitiveness, eliminate our ability to communicate with adult consumers, or ban certain of our products; •fiscal challenges, such as excessive excise tax increases and discriminatory tax structures; •illicit trade in tobacco and nicotine-containing products, including counterfeit, contraband and other non-compliant or otherwise illicit products; 45 •intense competition, including unfair competition from non-tax paid volume by certain manufacturers; and •legal challenges, including the pending and threatened litigation discussed in Part II, Item 8, Note 16.”

Annual report 2025A · The company itself

“Regulatory Restrictions SFP Sales Prohibitions: Some governments have banned, are seeking to ban, or severely restrict emerging tobacco and nicotine-containing products, such as our SFPs, and communication of truthful and non-misleading information about such products. Significant markets that have prohibited or severely restricted the sale of one or more category of SFP include Argentina, Brazil, Canada, France, India, Mexico, Turkey, Australia, Thailand, and Vietnam.”

Annual report 2025A · The company itself

“Restrictions and Bans on the Use of Ingredients: The WHO and others in the public health community have recommended restrictions or total bans on the use of some or all ingredients in both combustible products and SFPs, including menthol.”

Annual report 2025A · The company itself

“The U.S. has adopted new and increased tariffs on countries and specific goods, subject to evolving exemptions, with additional tariff increases proposed. Those changes, along with retaliatory actions by some trading partners, non-tariff restrictions or requirements being considered in connection with trade dispute negotiations, and the likelihood of additional developments, have created a volatile environment for global trade.”

Annual report 2025A · The company itself

“This decline is due to multiple factors, including increased taxes and pricing, governmental actions, the diminishing social acceptance of smoking, health concerns, competition, continuing economic and geopolitical uncertainty, and the continuing prevalence of illicit products.”

Annual report 2025A · The company itself

“Significant increases in cigarette-related taxes have been proposed or enacted and are likely to continue to be proposed or enacted in numerous jurisdictions.”

Annual report 2025A · The company itself

“Because our portfolio is weighted toward the premium-price cigarette category, tax regimes based on sales price can place us at a competitive disadvantage in certain markets.”

Annual report 2025A · The company itself

“A sustained period of elevated inflation across the markets in which we operate could result in higher operating and financing costs and lead to reduced demand for our products. Inflationary pressures have and may continue to result in significant increases to our expenses, including direct materials, wages, energy, transportation, and logistics costs.”

Annual report 2025A · The company itself

“Legislation, Regulation, Taxation and Other Matters Regarding the Manufacture, Marketing, Sale and Use of Tobacco and Other Nicotine-Containing Products Fiscal Challenges Excessive and disruptive excise, sales and other tax increases and discriminatory tax structures are expected to continue to have an adverse impact on our profitability, due to lower consumption and consumer down-trading to non-premium, discount, other low-price or low-taxed products such as fine cut tobacco, illicit cigarettes or illicit SFPs.”

Annual report 2025A · The company itself

“Seasonality Our business segments are not significantly affected by seasonality, although in certain markets cigarette consumption may be lower during the winter months due to the cold weather and may rise during the summer months due to outdoor use, longer daylight, and tourism.”

Annual report 2025A · The company itself

“Risks related to the natural environment and related legal or regulatory developments may have a negative impact on our business and results of operations. While we seek to mitigate the physical risks to our business associated with the natural environment through a comprehensive strategy that includes the development and implementation of robust mitigation and adaptation measures, we recognize that there are residual risks that lie beyond our operational control. For example, increased frequency and intensity of extreme droughts, floods, and/or heatwaves could negatively affect our manufacturing operations, tobacco-growing areas, third-party operators and third-party manufacturers sites, and supply regions for products and raw materials, all of which may lead to disruption of our supply chain and of operations at factories, warehouses and other premises.”

Annual report 2025A · The company itself

“Factors beyond our control, such as, without limitation, natural disasters; extreme weather events; pandemics; adverse economic, political or regulatory events; acts of war or threats of war; formal or informal bans or boycotts or changes in consumer preferences resulting from geopolitical developments; geopolitical instability affecting international trade; or other developments, could disrupt or increase the expenses related to our supply chain, manufacturing capabilities, distribution capabilities, or the energy and other utility services required to operate our factories, warehouses, and other premises.”

Annual report 2025A · The company itself

“As with other agricultural products, the price of tobacco leaf and cloves can be influenced by imbalances in supply and demand and the impacts of natural disasters and pandemics such as COVID-19.”

Annual report 2025A · The company itself

“Consumption of tax-paid cigarettes continues to decline in many of our markets. This decline is due to multiple factors, including increased taxes and pricing, governmental actions, the diminishing social acceptance of smoking, health concerns, competition, continuing economic and geopolitical uncertainty, and the continuing prevalence of illicit products.”

Annual report 2025A · The company itself

“Inflationary pressures may also negatively impact consumer purchasing power, which could result in reduced demand for our products.”

Annual report 2025A · The company itself

“Net revenues, excluding currency and acquisitions/divestitures, increased by 6.5%, mainly reflecting: a favorable pricing variance due to higher combustible tobacco pricing; and favorable volume/mix, driven by higher smoke-free products volume, notwithstanding unfavorable mix and lower volumes for cigarettes.”

Annual report 2025A · The company itself

“Restrictions on Public Smoking and Use of Nicotine-Containing Products in Public: The pace and scope of restrictions on the use of our products have increased significantly in most of our markets. Many countries around the world have adopted, or are likely to adopt, regulations that restrict or ban smoking and use of certain nicotine-containing products in public and/or workplaces, restaurants, bars and nightclubs.”

Annual report 2025A · The company itself

“A prolonged disruption at or shut-down of one or more of the facilities where our products or product components are produced, or sourced from, especially our ZYN production facility in Kentucky, U.S., which currently supplies substantially all of our capacity for ZYN sales in the U.S., due to natural- or man-made disasters or other events outside of our control, such as equipment malfunction or widespread outbreaks of acute illness, including COVID-19, supply chain constraints, a cybersecurity incident, or for any other reason, could limit our capacity to meet customer demands.”

Annual report 2025A · The company itself

“Risks Related to Cybersecurity, Data Governance and Artificial Intelligence We are significantly dependent on our and third-party information technology networks and systems, and a cybersecurity incident or attack against those networks or systems may adversely impact our business and operations. We and our business partners heavily rely on information technology networks and systems, including those connected to the Internet, to help manage business processes and operations, including the collection, storage, interpretation, and processing of confidential, sensitive, personal and other data; internal and external communications; marketing and e-commerce activities; the manufacture, sale, and distribution of our products; management of third-party business relationships; engagement with governmental authorities; innovation through research and development; and other activities necessary for business operations.”

Annual report 2025A · The company itself

“The failure or disruption of our information technology networks and systems, or those managed by third-party service providers or owned by our business partners and used in furtherance of PMI’s business, due to cybersecurity attacks; unauthorized attempts to corrupt or extract data; security vulnerabilities; failure to timely respond and mitigate cybersecurity risks; misconfigurations; human error; or failure or inability by us, third-parties, or our business partners to adhere to cybersecurity industry best practices, could place us at a competitive disadvantage, cause reputational damage, impact our operations, result in data breaches, significant business disruption, litigation, regulatory action including significant fines or penalties, financial impact, loss of revenue or assets including our intellectual property, personal, confidential, or sensitive data.”

Annual report 2025A · The company itself

“A prolonged disruption at or shut-down of one or more of the facilities where our products or product components are produced, or sourced from, especially our ZYN production facility in Kentucky, U.S., which currently supplies substantially all of our capacity for ZYN sales in the U.S., due to natural- or man-made disasters or other events outside of our control, such as equipment malfunction or widespread outbreaks of acute illness, including COVID-19, supply chain constraints, a cybersecurity incident, or for any other reason, could limit our capacity to meet customer demands.”

Annual report 2025A · The company itself

“Factors beyond our control, such as, without limitation, natural disasters; extreme weather events; pandemics; adverse economic, political or regulatory events; acts of war or threats of war; formal or informal bans or boycotts or changes in consumer preferences resulting from geopolitical developments; geopolitical instability affecting international trade; or other developments, could disrupt or increase the expenses related to our supply chain, manufacturing capabilities, distribution capabilities, or the energy and other utility services required to operate our factories, warehouses, and other premises.”

Annual report 2025A · The company itself

“As with other agricultural products, the price of tobacco leaf and cloves can be influenced by imbalances in supply and demand and the impacts of natural disasters and pandemics such as COVID-19.”

Annual report 2025A · The company itself

“Our reported results could be adversely affected by unfavorable currency exchange rates and currency fluctuations could impair our competitiveness.”

Annual report 2025A · The company itself

“Foreign currencies may fluctuate significantly against the U.S. dollar, reducing our net revenues, operating income and EPS.”

Annual report 2025A · The company itself

“Our primary local currency cost bases may be different from our primary currency revenue markets, and U.S. dollar fluctuations against various currencies may have disproportionate negative impact on cash flows and on net revenues as compared to our gross profit and operating income margins.”

Annual report 2025A · The company itself

“Consumption of tax-paid cigarettes continues to decline in many of our markets. This decline is due to multiple factors, including increased taxes and pricing, governmental actions, the diminishing social acceptance of smoking, health concerns, competition, continuing economic and geopolitical uncertainty, and the continuing prevalence of illicit products.”

Annual report 2025A · The company itself

“The financial and business performance of our smoke-free products is less predictable than our cigarette business. Our SFPs compete in relatively new categories, and the pace at which adult smokers adopt them may vary, depending on the competitive, regulatory, fiscal and cultural environment, and other factors in a specific market.”

Annual report 2025A · The company itself

“The four most significant direct materials that we purchase are printed paper board used in packaging, acetate tow used in filter making, fine paper used in the manufacturing of cigarettes and heated tobacco units, and susceptors used for TEREA and other consumables.”

Annual report 2025A · The company itself

“For our oral smoke-free products, direct materials include plastic cans and lids for nicotine pouches and traditional snus products, nicotine salt or nicotine premix for nicotine pouches, pouch material for individual pouchmaking and additives.”

Annual report 2025A · The company itself

“The four most significant direct materials that we purchase are printed paper board used in packaging, acetate tow used in filter making, fine paper used in the manufacturing of cigarettes and heated tobacco units, and susceptors used for TEREA and other consumables.”

Annual report 2025A · The company itself

“Other Commercialization and Risk Statement Authorization Frameworks: On March 22, 2023, a bill amending the Tobacco Hazards Prevention and Control Act in Taiwan went into effect. It regulates heated tobacco products and bans e-cigarettes.”

Annual report 2025A · The company itself

“As of December 31, 2025, our four geographical segments were as follows: •Europe Region is headquartered in Lausanne, Switzerland, and covers all the European Union countries, Switzerland, the United Kingdom, and also Ukraine, Moldova and Southeast Europe; it also includes our Wellness business; •South and Southeast Asia, Commonwealth of Independent States, Middle East and Africa Region ("SSEA, CIS & MEA") is headquartered in Dubai, United Arab Emirates.”

Annual report 2025A · The company itself

“In 2025, Russia accounted for around 9% of our total cigarette and heated tobacco unit shipment volume, and around 6% of our total net revenues.”

Annual report 2025A · The company itself

“Some of our competitors have different profit, volume and regulatory objectives, and some international competitors may be less susceptible than PMI to changes in currency exchange rates.”

Annual report 2025A · The company itself

“Certain countries in which we operate have adopted or could institute currency exchange controls and other regulations or policies that limit or prohibit our local subsidiaries' ability to convert local currency into U.S. dollars or to make payments outside the country.”

Annual report 2025A · The company itself

“Capital controls and/or foreign currency exchange constraints may affect the ability of our subsidiaries in impacted jurisdictions to settle foreign currency denominated imports of goods and services and/or to pay dividends and royalties. These factors may also increase foreign currency devaluation risks, which may have a negative impact on our net assets and results of operations in these jurisdictions.”

Annual report 2025A · The company itself

“Procurement and Raw Materials We purchase tobacco leaf of various types, grades and styles throughout the world, mostly through independent international tobacco suppliers. In 2025, we also contracted directly with farmers in several countries, including Argentina, Brazil, Italy, Pakistan and Poland.”

Annual report 2025A · The company itself

“Government mandated prices, production control programs, and shifts in crops driven by economic conditions may increase the cost or reduce the quality of tobacco and other agricultural products used to manufacture our products.”

Annual report 2025A · The company itself

“In 2025, certain inflationary elements such as direct materials and utilities stabilized, with a moderate overall increase in inflationary pressures driven by tobacco leaf costs.”

Annual report 2025A · The company itself

“At December 31, 2025, we employed approximately 84,900 people worldwide, including full-time, temporary and part-time staff.”

Annual report 2025A · The company itself

“However, this model also means that disruptions to farmer livelihoods, if not actively mitigated, could lead to supply chain disruption through farmer exit, reduced crop quality, unsustainable farming practices, increased regulatory scrutiny, and reputational risks.”

Annual report 2025A · The company itself

“Our cost of sales consists primarily of: tobacco leaf, non-tobacco raw materials, labor and manufacturing costs; shipping and handling costs; and the cost of devices produced by third-party electronics manufacturing service providers.”

Annual report 2025A · The company itself

“Additionally, we purchase electronic devices, which are made by various electronic manufacturing services providers ("EMS"). The components used in the assembly of these devices can be made by the EMS or purchased from other suppliers. These components include mechanical parts, electrical and electromechanical components, batteries, semiconductors, and packaging materials.”

Annual report 2025A · The company itself

“We increasingly rely on third-parties and their subcontractors/suppliers, sometimes concentrated in a specific geographic area, for product distribution and to manufacture some of our products and product parts (particularly, electronic devices and accessories), as well as to provide services, including to support our finance, commercialization and information technology processes. While many of these arrangements improve efficiency and decrease our operating costs, they also diminish our direct control.”

Annual report 2025A · The company itself

“Furthermore, there is a continued and, in some cases, increased focus by certain regulatory and legislative bodies on environmental policies, including by the governmental authorities in certain international jurisdictions where we operate.These policies include, among others, carbon emissions and other environmentally focused taxation and fees as well as disclosure requirements, which could lead to additional taxation; energy price increases; disclosure and data assurance risks; new compliance costs; increased distribution and supply chain costs; and other expenses impacting our cost of operations.”

Annual report 2025A · The company itself

“On December 3, 2024, the EU Council adopted its legally non-binding recommendation on smoke- and aerosol-free 51 environments. While the recommendations recognize scientifically proven differences between smoke-free and combustible products, they nevertheless encourage EU member states to restrict usage of both conventional tobacco products and inhalable smoke-free products in indoor public spaces and some outdoor areas.”

Annual report 2025A · The company itself

“Americas - Total Industry, PMI Shipment Volume and Market Share Commentaries The estimated industry volume for cigarettes and HTUs, excluding the U.S., decreased by 2.0% to 183.5 billion units due to a decrease in the cigarette market.”

Annual report 2025A · The company itself

“South Korea 68.0 70.5 14.0 14.0 7.5 8.3 6.5 5.7 20.6 19.9 9.5 8.1 Americas Argentina 26.8 26.4 17.0 16.4 17.0 16.4 — — 63.5 62.1 — — Mexico 30.5 31.6 17.6 18.5 17.3 18.3 0.3 0.2 57.8 58.5 1.0 0.7 (1) Market share estimates are calculated using IMS data, unless otherwise stated.”

Annual report 2025A · The company itself

“Our reported results could be adversely affected by unfavorable currency exchange rates and currency fluctuations could impair our competitiveness.”

Annual report 2025A · The company itself

“Our primary local currency cost bases may be different from our primary currency revenue markets, and U.S. dollar fluctuations against various currencies may have disproportionate negative impact on cash flows and on net revenues as compared to our gross profit and operating income margins.”

Annual report 2025A · The company itself

“Our cost of sales consists primarily of: tobacco leaf, non-tobacco raw materials, labor and manufacturing costs; shipping and handling costs; and the cost of devices produced by third-party electronics manufacturing service providers.”

Annual report 2025A · The company itself

“Furthermore, there is a continued and, in some cases, increased focus by certain regulatory and legislative bodies on environmental policies, including by the governmental authorities in certain international jurisdictions where we operate.These policies include, among others, carbon emissions and other environmentally focused taxation and fees as well as disclosure requirements, which could lead to additional taxation; energy price increases; disclosure and data assurance risks; new compliance costs; increased distribution and supply chain costs; and other expenses impacting our cost of operations.”

Annual report 2025A · The company itself

“Our business is subject to changes in adult consumer preferences and if we do not accurately assess market trends, are unable to adapt our product offerings to evolving consumer demands, or face challenges in product development, we could experience missed opportunities, supply chain challenges, reduced competitiveness, inefficient expenditures, and potential impacts on our customer base and brand reputation.”

Annual report 2025A · The company itself

“Inflation can also increase financing costs due to related increases in benchmark interest rates.”

Annual report 2025A · The company itself

“Tobacco production in certain countries is subject to a variety of controls, including government mandated prices and production control programs. Changes in the patterns of demand for agricultural products could cause farmers to produce less tobacco or cloves.”

Annual report 2025A · The company itself

“PMI affiliates and Swedish Match affiliates are taking appropriate actions to address the illicit resale of certain of our oral products including nicotine pouches outside their initial intended market of retail, such as Scandinavia, the U.S. and other markets.”

Annual report 2025A · The company itself

“The EU Single-Use Plastics Directive, which requires tobacco manufacturers and importers to cover the costs of public collection systems for tobacco product filters, under Extended Producer Responsibility ("EPR") schemes, came into force on July 2, 2019. As of December 31, 2025, the majority of EU Member States transposed the directive into national legislation and brought into force mandatory EPR schemes and related EPR costs for tobacco manufacturers and importers.”

Annual report 2025A · The company itself

“Production at our factory in Kharkiv remains suspended.”

Annual report 2025A · The company itself

“Our cost of sales consists primarily of: tobacco leaf, non-tobacco raw materials, labor and manufacturing costs; shipping and handling costs; and the cost of devices produced by third-party electronics manufacturing service providers.”

Annual report 2025A · The company itself

“We increasingly rely on third-parties and their subcontractors/suppliers, sometimes concentrated in a specific geographic area, for product distribution and to manufacture some of our products and product parts (particularly, electronic devices and accessories), as well as to provide services, including to support our finance, commercialization and information technology processes. While many of these arrangements improve efficiency and decrease our operating costs, they also diminish our direct control.”

Annual report 2025A · The company itself

“As of December 31, 2025, our four geographical segments were as follows: •Europe Region is headquartered in Lausanne, Switzerland, and covers all the European Union countries, Switzerland, the United Kingdom, and also Ukraine, Moldova and Southeast Europe; it also includes our Wellness business; •South and Southeast Asia, Commonwealth of Independent States, Middle East and Africa Region ("SSEA, CIS & MEA") is headquartered in Dubai, United Arab Emirates.”

Annual report 2025A · The company itself