Analysis of Profitability Ratios
Profitability ratios measure the company ability to generate profitable sales from its resources (assets).
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- Statement of Comprehensive Income
- Balance Sheet: Liabilities and Stockholders’ Equity
- Cash Flow Statement
- Common-Size Balance Sheet: Assets
- Analysis of Liquidity Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Enterprise Value to FCFF (EV/FCFF)
- Capital Asset Pricing Model (CAPM)
- Selected Financial Data since 2008
- Total Asset Turnover since 2008
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Profitability Ratios (Summary)
Philip Morris International Inc., profitability ratios
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
The profitability metrics exhibit varied performance over the five-year period. Initial declines in key margins are followed by signs of recovery in the most recent year presented.
- Gross Profit Margin
- The gross profit margin decreased from 68.06% in 2021 to 63.35% in 2023, indicating increasing costs of goods sold relative to revenue. However, a recovery is observed in 2024 and 2025, with the margin reaching 67.12% in the latter year, suggesting improved cost management or pricing strategies.
- Operating Profit Margin
- A consistent downward trend is evident in the operating profit margin from 41.32% in 2021 to a low of 32.85% in 2023. This suggests increasing operating expenses or a decline in revenue growth. A modest improvement is then seen in 2024 and 2025, with the margin reaching 36.64%, indicating some stabilization of operating performance.
- Net Profit Margin
- The net profit margin demonstrates the most significant fluctuation. It decreased substantially from 29.00% in 2021 to 18.63% in 2024, likely influenced by factors impacting both gross and operating profitability, as well as potentially non-operating items. A substantial increase is then observed in 2025, with the margin rising to 27.92%, suggesting a significant improvement in overall profitability.
- Return on Assets
- Return on assets decreased from 22.06% in 2021 to 11.42% in 2024, mirroring the declines in profit margins. The metric then increased to 16.40% in 2025, aligning with the improvements in profitability. This indicates a more efficient utilization of assets to generate profit in the latest year.
The absence of Return on Equity values prevents a complete assessment of profitability from the perspective of shareholders. Overall, the period shows a clear downturn in profitability culminating in 2023/2024, followed by a notable recovery in 2025.
Return on Sales
Return on Investment
Gross Profit Margin
Philip Morris International Inc., gross profit margin calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Gross profit | ||||||
| Net revenues | ||||||
| Profitability Ratio | ||||||
| Gross profit margin1 | ||||||
| Benchmarks | ||||||
| Gross Profit Margin, Competitors2 | ||||||
| Coca-Cola Co. | ||||||
| Mondelēz International Inc. | ||||||
| PepsiCo Inc. | ||||||
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
1 2025 Calculation
Gross profit margin = 100 × Gross profit ÷ Net revenues
= 100 × ÷ =
2 Click competitor name to see calculations.
The gross profit margin exhibited fluctuations over the five-year period. While gross profit generally increased in absolute terms, the margin itself did not consistently follow suit, indicating changes in the relationship between revenue and the cost of goods sold.
- Gross Profit Margin Trend
- The gross profit margin decreased from 68.06% in 2021 to 64.10% in 2022, representing a notable decline. This suggests a potential increase in the cost of goods sold relative to net revenues during that period. A further, albeit smaller, decrease was observed in 2023, with the margin reaching 63.35%.
- A recovery in the gross profit margin was evident in 2024, increasing to 64.81%. This improvement suggests some stabilization or mitigation of the cost pressures experienced in the prior years.
- The most significant increase in the gross profit margin occurred between 2024 and 2025, rising to 67.12%. This indicates a strengthening of profitability, potentially driven by improved cost management, pricing strategies, or a shift in product mix towards higher-margin offerings.
The absolute value of gross profit increased each year, moving from US$21,375 million in 2021 to US$27,282 million in 2025. However, the varying gross profit margin demonstrates that revenue growth did not directly translate into proportional gains in gross profitability throughout the entire period. The margin’s recent upward trend in 2025 is a positive indicator, suggesting improved efficiency or pricing power.
- Relationship to Net Revenues
- Net revenues also increased consistently over the period, from US$31,405 million in 2021 to US$40,648 million in 2025. The interplay between revenue growth and gross profit margin is crucial; while revenue increases contribute to higher gross profit in absolute terms, the margin reveals how effectively costs are being managed in relation to those revenues.
In conclusion, the gross profit margin experienced a period of decline followed by a recovery. The 2025 margin represents the highest value within the observed timeframe, signaling a positive shift in the company’s profitability profile.
Operating Profit Margin
Philip Morris International Inc., operating profit margin calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Operating income | ||||||
| Net revenues | ||||||
| Profitability Ratio | ||||||
| Operating profit margin1 | ||||||
| Benchmarks | ||||||
| Operating Profit Margin, Competitors2 | ||||||
| Coca-Cola Co. | ||||||
| Mondelēz International Inc. | ||||||
| PepsiCo Inc. | ||||||
| Operating Profit Margin, Sector | ||||||
| Food, Beverage & Tobacco | ||||||
| Operating Profit Margin, Industry | ||||||
| Consumer Staples | ||||||
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
1 2025 Calculation
Operating profit margin = 100 × Operating income ÷ Net revenues
= 100 × ÷ =
2 Click competitor name to see calculations.
The operating profit margin exhibited a fluctuating pattern over the five-year period. Initial values demonstrated a strong profitability position, which subsequently experienced a decline before showing signs of recovery.
- Operating Profit Margin Trend
- In 2021, the operating profit margin stood at 41.32%. A decrease was observed in 2022, with the margin falling to 38.56%. This downward trend continued into 2023, reaching a low of 32.85%. However, a positive shift occurred in 2024, as the margin increased to 35.38%. This improvement continued into 2025, with the operating profit margin reaching 36.64%.
The decline in the operating profit margin between 2021 and 2023 suggests potential pressures on profitability, possibly stemming from increased operating costs or decreased revenue growth relative to those costs. The subsequent recovery in 2024 and 2025 indicates successful implementation of cost control measures, improved pricing strategies, or increased operational efficiency. The values for operating income and net revenues support this interpretation, showing revenue growth in 2024 and 2025 alongside increasing operating income.
- Relationship to Operating Income and Net Revenues
- The operating profit margin’s fluctuations correlate with changes in both operating income and net revenues. While net revenues generally increased over the period, operating income did not consistently follow suit, particularly between 2021 and 2023. The increase in both metrics in 2024 and 2025 contributed to the observed margin improvement.
The operating profit margin’s movement from 32.85% in 2023 to 36.64% in 2025 suggests a strengthening of the company’s core business profitability. Continued monitoring of this metric will be crucial to assess the sustainability of this positive trend.
Net Profit Margin
Philip Morris International Inc., net profit margin calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net earnings attributable to PMI | ||||||
| Net revenues | ||||||
| Profitability Ratio | ||||||
| Net profit margin1 | ||||||
| Benchmarks | ||||||
| Net Profit Margin, Competitors2 | ||||||
| Coca-Cola Co. | ||||||
| Mondelēz International Inc. | ||||||
| PepsiCo Inc. | ||||||
| Net Profit Margin, Sector | ||||||
| Food, Beverage & Tobacco | ||||||
| Net Profit Margin, Industry | ||||||
| Consumer Staples | ||||||
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
1 2025 Calculation
Net profit margin = 100 × Net earnings attributable to PMI ÷ Net revenues
= 100 × ÷ =
2 Click competitor name to see calculations.
The net profit margin exhibited a declining trend from 2021 through 2023, followed by a recovery in 2024 and a substantial increase in 2025. This analysis details the observed patterns in net earnings attributable to PMI, net revenues, and the resulting net profit margin over the five-year period.
- Net Profit Margin Trend
- The net profit margin began at 29.00% in 2021. A gradual decrease was observed in 2022, falling to 28.49%. This downward trend accelerated in 2023, with the margin declining significantly to 22.21%. The decline continued into 2024, reaching a low of 18.63%. However, 2025 saw a marked improvement, with the net profit margin increasing substantially to 27.92%.
- Relationship between Net Earnings and Net Revenues
- Net revenues demonstrated a consistent upward trend throughout the period, increasing from US$31,405 million in 2021 to US$40,648 million in 2025. Net earnings attributable to PMI fluctuated. While relatively stable between 2021 and 2022 (US$9,109 million and US$9,048 million respectively), net earnings decreased in 2023 (US$7,813 million) and 2024 (US$7,057 million) before experiencing a significant increase in 2025 (US$11,348 million). The differing trends in net earnings and net revenues are a primary driver of the observed net profit margin fluctuations.
- Key Observations
- The most significant change occurred between 2024 and 2025, where the net profit margin increased by 9.29 percentage points. This substantial increase suggests improved cost management, pricing strategies, or a shift in product mix during 2025, relative to the preceding years. The period from 2021 to 2024 indicates increasing pressure on profitability, despite revenue growth, potentially due to rising costs or increased competition. The recovery in 2025 suggests a potential reversal of these pressures.
Further investigation into the underlying factors driving these changes in net earnings and revenues is recommended to fully understand the dynamics affecting the net profit margin.
Return on Equity (ROE)
Philip Morris International Inc., ROE calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net earnings attributable to PMI | ||||||
| Total PMI stockholders’ deficit | ||||||
| Profitability Ratio | ||||||
| ROE1 | ||||||
| Benchmarks | ||||||
| ROE, Competitors2 | ||||||
| Coca-Cola Co. | ||||||
| Mondelēz International Inc. | ||||||
| PepsiCo Inc. | ||||||
| ROE, Sector | ||||||
| Food, Beverage & Tobacco | ||||||
| ROE, Industry | ||||||
| Consumer Staples | ||||||
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
1 2025 Calculation
ROE = 100 × Net earnings attributable to PMI ÷ Total PMI stockholders’ deficit
= 100 × ÷ =
2 Click competitor name to see calculations.
The period under review demonstrates fluctuating net earnings attributable to PMI, while total stockholders’ deficit remains consistently negative. Consequently, the Return on Equity (ROE) exhibits significant volatility. Calculating ROE using the formula (Net Earnings / Stockholders’ Equity) – noting that Stockholders’ Equity is represented as a negative deficit – reveals the following trends.
- 2021
- ROE is not directly available but can be calculated as 9,109 / -10,106 = -0.901 or -90.1%. This indicates a substantial loss relative to the stockholders’ deficit.
- 2022
- ROE is not directly available but can be calculated as 9,048 / -8,957 = -1.009 or -100.9%. The negative return worsened slightly compared to the prior year, despite a decrease in the absolute value of the deficit.
- 2023
- ROE is not directly available but can be calculated as 7,813 / -11,225 = -0.695 or -69.5%. A substantial improvement in ROE is observed, driven by a decrease in net earnings but a larger increase in the absolute value of the deficit.
- 2024
- ROE is not directly available but can be calculated as 7,057 / -11,750 = -0.600 or -60.0%. The ROE continues to improve, though at a slower rate, as net earnings decline further and the deficit increases.
- 2025
- ROE is not directly available but can be calculated as 11,348 / -9,994 = -1.136 or -113.6%. A significant reversal is observed, with ROE declining sharply due to a substantial increase in net earnings coupled with a decrease in the absolute value of the deficit. The negative return is the largest observed in the period.
The consistently negative stockholders’ deficit results in negative ROE values throughout the analyzed period. While fluctuations in net earnings influence the magnitude of the negative ROE, the underlying structure of the balance sheet – specifically the deficit – is the primary driver of the consistently negative returns. The substantial increase in net earnings in 2025, while positive in absolute terms, exacerbates the negative ROE due to the smaller absolute value of the deficit.
The trend suggests that profitability alone does not translate to positive returns for equity holders given the company’s capital structure. A reduction in the deficit, or a shift towards positive equity, would be necessary to achieve a positive ROE.
Return on Assets (ROA)
Philip Morris International Inc., ROA calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net earnings attributable to PMI | ||||||
| Total assets | ||||||
| Profitability Ratio | ||||||
| ROA1 | ||||||
| Benchmarks | ||||||
| ROA, Competitors2 | ||||||
| Coca-Cola Co. | ||||||
| Mondelēz International Inc. | ||||||
| PepsiCo Inc. | ||||||
| ROA, Sector | ||||||
| Food, Beverage & Tobacco | ||||||
| ROA, Industry | ||||||
| Consumer Staples | ||||||
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
1 2025 Calculation
ROA = 100 × Net earnings attributable to PMI ÷ Total assets
= 100 × ÷ =
2 Click competitor name to see calculations.
The Return on Assets (ROA) exhibited a declining trend from 2021 to 2023, followed by a recovery in subsequent years. This analysis details the observed patterns in ROA alongside its constituent components, net earnings attributable to PMI and total assets.
- Overall ROA Trend
- In 2021, the ROA stood at 22.06%. A consistent decrease was observed over the next two years, reaching 11.96% in 2023. The ROA then stabilized, increasing to 11.42% in 2024, and further improving to 16.40% in 2025. This indicates a potential stabilization and subsequent improvement in asset utilization efficiency.
- Net Earnings Impact
- Net earnings attributable to PMI experienced a slight decrease from US$9,109 million in 2021 to US$9,048 million in 2022. A more substantial decline occurred in 2023, with net earnings falling to US$7,813 million. Further reduction was seen in 2024, reaching US$7,057 million. However, a significant increase was recorded in 2025, with net earnings rising to US$11,348 million. This fluctuation in net earnings directly influenced the ROA, particularly contributing to the decline in 2023 and 2024, and the subsequent recovery in 2025.
- Total Asset Impact
- Total assets increased considerably from US$41,290 million in 2021 to US$61,681 million in 2022. This growth continued, albeit at a slower pace, reaching US$65,304 million in 2023. A decrease in total assets was observed in 2024, falling to US$61,784 million, before increasing again to US$69,185 million in 2025. The increase in total assets from 2021 to 2023, coupled with declining net earnings, contributed to the decrease in ROA during that period. The asset decrease in 2024 partially offset the impact of lower net earnings, while the asset increase in 2025 was accompanied by a substantial increase in net earnings, driving the ROA recovery.
The interplay between net earnings and total assets demonstrates a complex relationship impacting ROA. While asset growth can indicate expansion, its effect on ROA is contingent upon corresponding profitability. The substantial increase in net earnings in 2025, alongside a moderate increase in total assets, was the primary driver of the ROA improvement observed in that year.