HG & HY Consumer Checkup

Research evidence excerpt

HG & HY Consumer Checkup

Yaakov Musheyev AC North America Credit Research

(1-212) 834 5865 24 July 2026 J P M O R G A N

yaakov.a.musheyev@jpmorgan.com

• Philip Morris (PM) reported solid 2Q26 earnings and reaffirmed its FY26 guidance,

still guiding to net leverage near ~2x by year-end with no share repurchases. 2Q beat

across the board with revs $11.2bn (+10.4%) vs street’s $10.6bn, GPM 68.4% vs street’s

68.3%, and EBIT $4.77bn vs street’s $4.45bn. The beat was driven by pricing and

shipments across every segment – Intl Smoke-Free +14.2% (shipments +8.0%), Intl

Combustibles +9.8% (shipments +1.1%) and US Combustibles -0.7% (shipments

+1.8%) – powered by continued IQOS growth and a resilient combustibles segment

where 2Q pricing ran +10% and Marlboro matched its 11% Intl share record. We note that

ZYN US shipments returned to growth (+2% to 2.9bn pouches) after 1Q inventory

normalization, a modest Mideast impact (mainly input costs, no consumer behavior shift

yet) and a $511mn non-cash impairment tied to its Canadian affiliate (RBH). FY26

guidance was reaffirmed as it continues to expect industry cig volumes -2.3%, organic

net revs +5.7%, organic EBIT +7-9%, OCF ~$13.5bn, capex $1.4-1.6bn., with adjusted

EPS nudged to $8.26-8.41 ($8.11-8.26 ex FX) vs prior $8.36-8.51. On the call,

management noted that it deliberately held the underlying algorithm despite two straight

beats to fund a 2H US investment step-up behind ZYN rather than flow upside through.

For 3Q26, it expects adjusted EPS of $2.20-2.25 (inc FX -8c) vs street’s $2.43.

• PVH Corp (PVH) announced a new CFO, replacing the interim CFO. Alexis Rollier

will join as CFO in early September 2026. Rollier joins from LVMH-owned Sephora,

where he served as Global COO and Global CFO since 2018, with prior senior finance