Altria Signals Lower Profit Outlook Amidst Competition, Declining Cigarette Demand
Altria Group, the parent company of Marlboro, anticipates a potential decline in its annual adjusted profits due to escalating competition from e-cigarettes and ongoing weakness in cigarette consumption. The company's share prices, which surged nearly 30% in 2024, experienced a 2% dip in premarket trading.
Altria and its competitors have witnessed a sustained decline in tobacco sales, attributed to consumer preferences for lower-priced brands, vaping alternatives, and stringent regulations. The company's domestic cigarette shipments declined by 8.8% in the fourth quarter of 2024, compared to a 7.6% reduction in the same period a year prior.
Despite proposed measures by U.S. regulators to impose nicotine caps in cigarettes, it remains uncertain if they will be enacted. Altria's efforts to diversify its portfolio into tobacco alternatives have resulted in increased promotional expenses. However, the Trump administration's withdrawal of a ban on menthol cigarettes provides temporary relief to the industry.
Altria's NJOY brand, which manufactures vaping devices and cartridges, faces an import ban imposed by a U.S. trade tribunal following a patent dispute with Juul Labs. The ban is scheduled to take effect by March 31st, or earlier if approved by the Trade Representative.
The company projects adjusted annual earnings between $5.22 and $5.37 per share, with the midpoint falling below analyst estimates of $5.35. Despite this, Altria's quarterly revenue exceeded expectations, totaling $5.15 billion net of excise taxes. Its adjusted profit per share for the quarter aligned with projections at $1.29. Altria has also announced a $1 billion share repurchase program.