179-year-old tobacco giant sends blunt message to workers

Philip Morris International, an international tobacco company, has recently been in the news for its “smoke-free” alternatives and regulatory battles it faces with the ZYN pouches.

Philip Morris closes office, lays off

Amidst this, it filed a WARN (Worker Adjustment and Retraining Notification) letter with the Virginia Employment Commission on January 28 regarding the closure of its Richmond, VA office. The move will result in 135 permanent job cuts; all the workers are without union representation.

The tobacco maker noted that a majority of impacted workers will be offered alternative positions in other states. The first job losses will occur on April 17, 2026.

The Richmond closure comes as Philip Morris continues to reshape its US footprint with its “smoke-free” nicotine products, especially ZYN, which it acquired as part of its $16 billion acquisition of Swedish Match in 2022. 

Investors continue to reward the shift; Philip Morris International's (PM) stock has risen 37% over the year and increased 24% this past quarter following its solid Q3 earnings report. 

The report highlighted its “smoke-free” products as a big driver of revenue growth. 

The company will release fourth-quarter financial results on Feb. 6. Analysts expect revenue of $10.4 billion and earnings per share of $1.67.

Philip Morris Q3 earnings key takeaways:

• Net revenue of $10.8 billion, $4.4 billion from the smoke-free business and $6.4 billion from combustibles
• Diluted EPS of $2.23, up 13.2% and adjusted diluted EPS reported at $2.24, which rose 17.3% year over year.
• Gross profit of $7.4 billion, translating to 8.7% organic growth.
• Operating income of $4.3 billion was a 7.5% organic growth.
• Quarterly dividend increased 8.9% to $1.47 per share.
• Smoke-free accounted for 41% of total net revenues.

A smoke-free future

When introducing its smoke-free restructuring, PMI shifted its headquarters from New York to Stamford, CT. Now, effective Jan 1, 2026, it has introduced two new units to expand its smoke-free future – PMI International and PMI US.

More Retail:

• Costco sees major shift in member behavior
• Retail chain shuts all locations as legal changes hit industry
• Lululemon struggles to reverse concerning customer behavior
• T-Mobile launches free offer for customers after major loss

The first-quarter 2026 financial reports will be based on these new segments, while the tobacco giant's upcoming Q4 report will disclose certain historical financial information for the 2023 to 2025 period based on these new segments.

Its smoke-free products are now available in over 100 markets and have been growing steadily amid a decline in cigarette consumption, serving as a revenue booster for the owner of Marlboro, one of the most consumed cigarette brands.

According to a CDC report (Centers for Disease Control and Prevention), cigarette smoking in adults has declined from 42.4% in 1965 to 11.6% in 2022 in the US. However, the number of people using e-cigarettes has increased over the years, leading to “no net change in overall current adult tobacco product use.”

At a time when adults are looking for comparatively risk-free options to smoking, Philip Morris has been focusing on expanding its smoke-free products.

PM sees a future of cigarettes replaced by its “smoke-free products that - while not risk-free - are a far better choice than cigarette smoking.”

Bumpy road ahead for Philip Morris

But the road is not entirely smooth. PMI is pursuing FDA TPSAC (Tobacco Products Scientific Advisory Committee) with scientific evidence to authorize its oral smokeless product ZYN as a modified risk tobacco product. If granted the designation, it would allow PMI to advertise to adults “that switching completely to ZYN reduces their risk of many smoking-related diseases,” according to TheFly.

Amid regulatory pressures, ZYN pouches also face tax threats from New York Gov. Kathy Hochul, who is planning to tax them and other nicotine products at the same 75% wholesale tax rate as cigarettes, the New York Post reported. 

In terms of stock performance, Jefferies analyst Edward Mundy sees limited re-rating potential for the shares and recently downgraded the stock to "Hold" from "Buy", lowering the price target to $180 from $220. The firm notes increasing competition from peers British American Tobacco, which is driving growth in US pouches, while Japan Tobacco is “competing more assertively” in heated tobacco, as reported by TheFly.

The company's latest layoffs continue a trend, following its late 2024 closure of its cigarette manufacturing plants in Berlin and Dresden, which resulted in 372 layoffs as the company responded to declining demand for traditional tobacco in Europe.

Related: 118-year-old shipping giant just delivered workers a harsh message