Altria (MO) Q1 2021 earnings beat

A Philip Morris Marlboro cigarette burns in an ashtray for this arranged photo in Tiskilwa, Ill. On Wednesday, July 12, 2017.

Daniel Acker | Bloomberg | Getty Images

Altria’s earnings declined in the first quarter as sales fell below estimates and cigarette shipments continued to decline.

The parent company of Marlboro Cigarettes has turned its business away from traditional tobacco products and announced it will acquire the remaining 20% ​​stake in On, a nicotine pouch product.

The company’s stock fell 1.1% in late morning trading.

The company reported for the first quarter, versus Wall Street expectations, based on an analyst survey by Refinitiv:

  • Earnings per share: $ 1.07 adjusted versus $ 1.05 expected
  • Revenue: $ 4.88 billion excluding excise taxes versus $ 4.98 billion expected

Net income declined from $ 1.55 billion, or 83 cents per share last year, to $ 1.42 billion, or 77 cents per share.

Excluding items, Altria earned $ 1.07 per share, beating the analysts surveyed by Refinitiv who expected it to be $ 1.05 per share.

Revenue decreased 5.1% from $ 6.36 billion a year ago to $ 6.04 billion. However, after excise taxes, sales came in at $ 4.88 billion, falling short of what analysts had expected to be $ 4.98 billion.

Total cigarette shipments to wholesalers decreased 12% year over year. However, Altria estimates that cigarette industry shipments were down 2% in the quarter, unchanged from last year’s levels.

Altria again lowered the value of its Juul Vaping brand, this time trading its value around $ 200 million. The company said the fair value of its stake, which it acquired for $ 12.8 billion in December 2018, was $ 1.5 billion at the end of March.

Although the overall vaping category is up 24% year over year, Juul’s retail share is down 6% year over year to 33% of the category, according to the company.

“Against a challenging comparison, our tobacco businesses performed well in the first quarter and we made further progress in developing our non-combustible portfolio,” said CEO Billy Gifford.

Gifford also attributed part of that success to the trends the pandemic brought with it when people were able to smoke more easily at home throughout the day.

“You also have the compensation, you have the government incentives that just came out and we’ll see how consumers feel about when their mobility has increased and what other areas of discretionary spending they could use those incentives for,” added he added a conference call.

Altria and other tobacco companies could face a tougher regulatory environment. On Thursday, the Food and Drug Administration, which regulates tobacco products in the United States, announced a ban on menthol-flavored cigarettes. Menthol cigarettes were often used disproportionately by colored people. The vast majority of black smokers consume menthol cigarettes, and black men have the highest rate of lung cancer deaths in the United States

Altria has a 26% share of the menthol market, which accounts for about a third of all cigarettes sold in the United States. According to a recent report by Bernstein analyst Callum Elliott, around 17% of Altria’s cigarette volume falls into this category.

In addition, the Biden government announced last week that it was considering putting nicotine levels in cigarettes.

All of these potential changes are in the very early stages and are likely to be questioned by the industry.

Altria previously sent a letter to the FDA asking it to make it known that nicotine, the addictive component of cigarettes, does not cause cancer. The company said this would help smokers switch to potentially less risky, non-flammable options, such as: B. their heated tobacco stick Iqos and the nicotine pouch On.

The full publication of the results can be found here.

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