Performance exceeded expectations, driven by strong growth in smoke-free products and the announcement of new medium-term targets, but the impact of Japan's consumption tax hike creates short-term pressure.

2026 smoke-free product volume growth guidance is high single-digit to low double-digit; IQOS adjusted to over 12% growth in 2025; ZYN growth in the U.S. fell short of expectations.

Business progress: IQOS accelerating growth in Italy, Germany, Spain, Indonesia, Philippines, and Taiwan (4% share); ZYN Ultra's FDA authorization application, expected approval in summer; Japan's phased consumption tax increases will impact volumes periodically, but IQOS market share remains solid amid the competitive landscape.

Guidance and outlook: 2026 targets upwardly revised; medium-term 2026–2028 algorithm is strong; combustible business sees volume declines due to sharp tax hikes in India and Mexico, but profits still grow; overall CAGR is similar to that of the medium term.

Risk/positive signals: Management is positive about FDA authorization, believing ZYN needs higher nicotine strength products, but is cautious about elasticity regarding Japan's consumption tax.