Restructuring Activities

12 Months Ended

Dec. 31, 2025

Restructuring and Related Activities [Abstract]

Restructuring Activities

Restructuring Activities:

For the years ended December 31, 2025, 2024 and 2023, PMI recorded total pre-tax restructuring charges of $241 million, $180 million and $109 million, respectively. These pre-tax charges were included in marketing, administration and research costs on the consolidated statements of earnings.

Manufacturing Footprint Optimization - Germany

As a result of declining demand for cigarettes and other combustible tobacco products in Europe, two of PMI’s German subsidiaries, Philip Morris Manufacturing GmbH and F6 Cigarettenfabrik GmbH & Co. KG, initiated consultations with employee representatives on October 29, 2024, on a proposal to end production in the factories located in Berlin and in Dresden by the end of the second quarter of 2025, and to seek to agree on fair solutions for any impacted employees.

The consultation processes for both of these factories were concluded in April 2025, and as a result of the closure PMI recorded pre-tax restructuring charges of $241 million in 2025. This amount included pension and employee separation costs of $125 million and contract termination and other costs of $24 million, which will be paid in cash, as well as asset impairment costs of $92 million, primarily related to property lease, and machinery and equipment, which are non-cash charges.

IQOS products sourcing for the U.S. market

On February 1, 2024, a subsidiary of PMI entered into a settlement agreement (the “Settlement Agreement”) with Nicoventures Trading Limited (“NTV”), an affiliate of British American Tobacco p.l.c. (“BAT”). In accordance with its terms, the parties to the Settlement Agreement filed a joint motion to rescind the limited exclusion order and the cease-and-desist order issued by the International Trade Commission (“ITC”) on September 29, 2021, which was granted on March 11, 2024. Prior to their rescission, the orders prohibited the importation and sales of imported IQOS products to the United States of America. As a result, PMI has initiated a project in the first quarter of 2024 to restructure the sourcing of IQOS products to commercialize them in the United States. For further details on IQOS commercialization in the U.S. and the related agreement with Altria Group, Inc (“Altria”), see Note 3. Acquisitions and Divestitures.

In 2024, PMI recorded pre-tax restructuring charges of $133 million related to this restructuring activity. This amount included contract termination costs with suppliers of $73 million, including prepaid commitments of $20 million. The amount also included asset impairment costs of $60 million, primarily related to machinery and equipment and other assets, which were non-cash charges.

Venezuela

In the first quarter of 2024, PMI ceased its operations in Venezuela and as a result, recorded pre-tax restructuring charges of $47 million. The amount primarily included non-cash charges related to the reclassification of accumulated foreign currency translation losses from other comprehensive losses of $38 million and asset impairment charge of $5 million related to land and buildings. This amount also included contract termination, severance and other related costs of $4 million, which were paid in cash.

For details on the income tax impact of the transaction, see Note 10. Income Taxes.

E-Vapor Products Manufacturing Optimization

In the first quarter of 2023, PMI initiated a project to fully outsource and restructure the manufacturing of e-vapor devices and consumables. As a result, PMI recorded pre-tax restructuring charges of $109 million. This amount included contract termination costs for suppliers of $78 million, including $21 million of embedded finance lease terminations, payable in cash. This amount also included asset impairment costs of $31 million, primarily related to machinery and equipment, which were non-cash charges.

Restructuring Charges by Segment

During 2025, 2024 and 2023, PMI recorded the following pre-tax restructuring charges by segment:

(in millions)	2025		2024		2023
Reclassification of accumulated foreign currency translation losses from other comprehensive losses:
Americas	$	—	$	38	$	—
Total reclassification of accumulated foreign currency translation losses from other comprehensive losses	—		38		—
Separation programs:
Europe	125		—		—
Total separation programs	125		—		—
Contract termination charges: (1)
Europe	24		—		34
SSEA, CIS & MEA	—		—		23
EA, AU & PMI GTR	—		—		14
Americas	—		77		7
Total contract termination and other charges	24		77		78
Asset impairment charges (1)
Europe	92		—		13
SSEA, CIS & MEA	—		—		9
EA, AU & PMI GTR	—		—		5
Americas	—		65		4
Total asset impairment charges	92		65		31
Restructuring charges	$	241	$	180	$	109

(1) E-vapor products manufacturing optimization charges in 2023 were allocated across all geographical segments.

Movement in Restructuring Related Liabilities

The movement in restructuring related liabilities for the year ended December 31, 2025 was as follows:

(in millions)
Liability balance, January 1, 2025	$	28
Charges, net	149
Cash spent	(35)
Currency/other	(27)
Liability balance, December 31, 2025	$	115

Future cash payments for restructuring activities incurred to date are anticipated to be substantially paid by the end of 2026.