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Financial Instruments:
 12 Months Ended
Dec. 31, 2025
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Financial Instruments:
Financial Instruments:

Overview

PMI operates globally with manufacturing and sales facilities in various locations around the world and is exposed to risks such as changes in foreign currency exchange rates and interest rates. As a result, PMI uses deliverable and non-deliverable forward foreign exchange contracts, foreign currency swaps and foreign currency options, (collectively referred to as "foreign exchange contracts"), and interest rate contracts to mitigate its exposure to changes in foreign currency exchange and interest rates related to net investments in foreign operations, as well as third-party and intercompany actual and forecasted transactions. The primary currencies to which PMI is exposed include the Euro, Indian rupee, Indonesian rupiah, Japanese yen, Russian ruble and Swiss franc.

Additionally, certain materials that PMI uses in the manufacturing of its products are exposed to market price risks. PMI uses commodity derivative contracts (“commodity contracts") to manage its exposure to the market price volatility of certain commodity components of these materials.

These foreign exchange contracts, interest rate contracts and commodity contracts are collectively referred to as "derivative contracts". PMI is not a party to leveraged derivatives and, by policy, does not use derivative financial instruments for speculative purposes. Substantially all of PMI's derivative financial instruments are subject to master netting arrangements, whereby the right to offset occurs in the event of default by a participating party. While these contracts contain the enforceable right to offset through close-out netting rights, PMI elects to present them on a gross basis in the consolidated balance sheets. Collateral associated with these arrangements is in the form of cash and is unrestricted. Changes in collateral posted are included in cash flows from investing activities and changes in collateral received are included in cash flows from financing activities. Financial instruments qualifying for hedge accounting must maintain a specified level of effectiveness between the hedging instrument and the item being hedged, both at inception and throughout the hedged period. PMI formally documents the nature and relationships between the hedging instruments and hedged items, as well as its risk-management objectives, strategies for undertaking the various hedge transactions and method of assessing hedge effectiveness. Additionally, for hedges of forecasted transactions, the significant characteristics and expected terms of the forecasted transaction must be specifically identified, and it must be probable that each forecasted transaction will occur. If it were deemed probable that the forecasted transaction would not occur, the gain or loss would be recognized in earnings.
The gross notional amounts for outstanding derivatives as of December 31, 2025 and 2024, were as follows:

(in millions)20252024
Derivative contracts designated as hedging instruments:
Foreign exchange contracts$29,062 $25,149 
Interest rate contracts4,700 3,000 
Commodity contracts3 9 
Derivative contracts not designated as hedging instruments:
Foreign exchange contracts16,278 15,942 
Total$50,043 $44,100 

The fair value of PMI’s derivative contracts included in the consolidated balance sheets as of December 31, 2025 and 2024, were as follows:
Derivative AssetsDerivative Liabilities
Fair Value
Fair Value
(in millions)
Balance Sheet
 Classification
20252024
Balance Sheet 
Classification
20252024
Derivative contracts designated as hedging instruments:
Foreign exchange contractsOther current assets$378 $772 Other accrued liabilities$499 $7 
Other assets107 299 Other liabilities853 60 
Interest rate contractsOther current assets— — Other accrued liabilities27 50 
Other assets77 4 Other liabilities— 3 
Commodity contractsOther current assets— — Other accrued liabilities1 — 
Other assets— — Other liabilities— — 
Derivative contracts not designated as hedging instruments:
Foreign exchange contracts
Other current assets 
91 331 Other accrued liabilities319 69 
Other assets— 12 Other liabilities276 58 
Total gross amount derivatives contracts presented in the consolidated balance sheets
$653 $1,418 $1,975 $247 
Gross amounts not offset in the consolidated balance sheets
Financial instruments(444)(218)(444)(218)
Cash collateral received/pledged(183)(863)(1,374)(18)
Net amount$26 $337 $157 $11 

PMI assesses the fair value of its derivative contracts using standard valuation models that use, as their basis, readily observable market inputs. The fair value of PMI’s foreign exchange forward contracts, foreign currency swaps and interest rate derivatives is determined using prevailing spot and forward foreign exchange rates, spot and forward interest rates, and the instruments’ respective maturity dates. The fair value of currency options is estimated using a Black‑Scholes valuation model that incorporates foreign
exchange spot rates, interest rate differentials, currency volatilities, strike rates and maturity dates. The fair value of PMI’s commodity contracts is determined using prevailing market spot and futures prices and the corresponding maturity dates. PMI’s derivative contracts have been classified within Level 2 at December 31, 2025 and 2024.

For the years ended December 31, 2025, 2024 and 2023, PMI's derivative contracts impacted the consolidated statements of earnings and comprehensive earnings as follows:

(pre-tax, in millions)For the Years Ended December 31,
Amount of Gain/(Loss) Recognized in Other Comprehensive Earnings/(Losses) on DerivativesStatement of Earnings
Classification of Gain/(Loss)
on Derivatives		Amount of Gain/(Loss) Reclassified from Other Comprehensive Earnings/(Losses) into EarningsAmount of Gain/(Loss) Recognized in Earnings
202520242023202520242023202520242023
Derivative contracts designated as hedging instruments:
Cash flow hedges:
Foreign exchange contracts$(93)$433 $195 
Net revenues$108 $186 $194 
Cost of sales— — — 
Marketing, administration and research costs(42)20 27 
Interest expense, net(1)2 (15)
Interest rate contracts(14)95 37 Interest expense, net54 51 46 
Commodity contracts(1)(1)(7)Cost of sales(7)(1)— 
Fair value hedges:
Interest rate contracts
Interest expense, net (a)
$65 $(32)$(14)
Net investment hedges (b):
Foreign exchange contracts(1,989)867 (788)
Interest expense, net (c)
301 293 268 
Marketing, administration and research costs— 35 — 
Derivative contracts not designated as hedging instruments:
Foreign exchange contractsInterest expense, net367 219 301 
Marketing, administration and research costs (d)
(1,515)523 (575)
Total$(2,097)$1,394 $(563)$112 $293 $252 $(782)$1,003 $(20)
(a) The gains (losses) from these contracts are offset by the changes in the fair value of the hedged item
(b) Amount of gains (losses) on hedges of net investments principally related to changes in foreign currency exchange and interest rates between the Euro and U.S. dollar
(c) Represent the gains for amounts excluded from the effectiveness testing
(d) The gains (losses) from these contracts attributable to changes in foreign currency exchange rates are largely offset by the (losses) and gains generated by the underlying intercompany and third-party loans being hedged
Cash Flow Hedges

PMI has entered into derivative contracts to hedge the foreign currency exchange, interest rate and commodity price risks related to certain forecasted transactions. Gains and losses associated with qualifying cash flow hedge contracts are deferred as components of accumulated other comprehensive losses until the underlying hedged transactions are reported in PMI’s consolidated statements of earnings. As of December 31, 2025, PMI has hedged forecasted transactions with derivative contracts expiring at various dates through June 2028. Premiums paid for, and settlements of, the derivative contracts designated as cash flow hedges are included primarily in cash flows from operating activities on PMI’s consolidated statements of cash flows.

Fair Value Hedges
PMI has entered into fixed-to-floating interest rate contracts, designated as fair value hedges to minimize exposure to changes in the fair value of fixed rate U.S. dollar-denominated debt that results from fluctuations in benchmark interest rates. For derivative contracts that are designated and qualify as fair value hedges the gain or loss on the derivative, as well as the offsetting gain or loss on the hedged items attributable to the hedged risk, is recognized in current earnings. The carrying amount of the debt hedged, which includes the cumulative adjustment for fair value gains/losses, as of December 31, 2025 was $5,129 million, including $402 million related to discontinued hedges, of which $645 million was recorded in current portion of long-term debt and $4,484 million was recorded in long-term debt in the consolidated balance sheets. The cumulative amount of fair value gains/(losses) included in the carrying amount of the debt hedged was $(56) million as of December 31, 2025.

Hedges of Net Investments in Foreign Operations

PMI designates derivative contracts and certain foreign currency denominated debt and other financial instruments as net investment hedges, primarily of its Euro net assets. The amount of pre-tax gain related to the non-derivative financial instruments, that was reported as a component of accumulated other comprehensive losses within currency translation adjustments, was nil, $99 million and $48 million, for the years ended December 31, 2025, 2024 and 2023, respectively. Settlements of the derivative contracts designated as net investment hedges are included in cash flows from investing activities on PMI’s consolidated statements of cash flows.

Other Derivatives

PMI has entered into derivative contracts to hedge the foreign currency exchange and interest rate risks related to intercompany loans between certain subsidiaries and third-party loans. While effective as economic hedges, no hedge accounting is applied for these contracts; therefore, the gains (losses) relating to these contracts are reported in PMI’s consolidated statements of earnings. Settlements of other derivative contracts are included primarily in cash flows from investing activities on PMI's consolidated statements of cash flows.
Qualifying Hedging Activities Reported in Accumulated Other Comprehensive Losses

Derivative gains or losses reported in accumulated other comprehensive losses are a result of qualifying hedging activity. Transfers of these gains or losses to earnings are offset by the corresponding gains or losses on the underlying hedged item. Hedging activity affected accumulated other comprehensive losses, net of income taxes, as follows:
For the Years Ended December 31,
(in millions)
202520242023
Gain/(loss) as of January 1,
$467 $241 $266 
Derivative (gains)/losses transferred to earnings
(94)(213)(220)
Change in fair value
(89)439 195 
Gain/(loss) as of December 31,
$284 $467 $241 

At December 31, 2025, PMI expects $109 million of derivative gains that are included in accumulated other comprehensive losses to be reclassified to the consolidated statement of earnings within the next 12 months. These gains are expected to be substantially offset by the statement of earnings impact of the respective hedged transactions.

Contingent Features

PMI’s derivative instruments do not contain contingent features.
Credit Exposure and Credit Risk

PMI is exposed to credit loss in the event of non-performance by counterparties. While PMI does not anticipate non-performance, its risk is limited to the fair value of the financial instruments less any cash collateral received or pledged. PMI actively monitors its exposure to credit risk through the use of credit approvals and credit limits and by selecting and continuously monitoring a diverse group of major international banks and financial institutions as counterparties.

Other Investments

At December 31, 2025 and 2024, the fair values of PMI's certain other investments were as follows:

December 31,
(in millions)
20252024
Level 1, U.S. dollar denominated bonds in Argentina$189 $125 
Level 2, Indonesian rupiah denominated bonds in Indonesia27 — 

For the years ended December 31, 2025 and 2024, the gross unrealized pre-tax losses on these investments were immaterial.