Altria Group reported second-quarter results showing a miss on adjusted earnings per share and mixed volume trends across its product portfolio. The company posted adjusted EPS of $1.48, compared with the $1.50-per-share consensus compiled by LSEG, and said revenue net of excise taxes rose 1.2% to $5.36 billion, versus analysts' estimates of $5.35 billion.
Shares of the Marlboro maker were trading down about 3% in premarket trading following the release.
Management attributed part of the pressure on premium product demand to changes in consumer spending prompted by higher fuel and everyday living costs, which the company linked to the Middle East conflict. According to Altria, those cost pressures have led some smokers to opt for lower-priced cigarette alternatives, reducing demand for premium brands such as Marlboro.
Volume details in the quarter to June 30 showed a 7.4% decline in Marlboro shipment volumes and a 4.2% decline for On! nicotine pouches. At the same time, shipment volumes for discount cigarettes increased sharply, rising 67.3% in the reported quarter. The company has pointed to discount brands, including Basic, as a partial buffer against down-trading.
Altria has emphasized diversification beyond combustible cigarettes in recent years, investing in alternative nicotine products. Its U.S. portfolio includes On! nicotine pouches and a stake in products such as NJOY vapes, which Altria has highlighted as part of its strategy to capture demand outside traditional cigarettes.
Looking ahead, Altria maintained a narrowed full-year earnings per share outlook of $5.61 to $5.72, compared with its earlier guidance range of $5.56 to $5.72.
Context and implications
- Consumer down-trading is evident in a sharp shift toward discount cigarettes during the quarter, which helped limit the revenue impact but weighed on higher-margin premium volumes.
- Revenue net of excise taxes grew slightly, keeping top-line performance roughly in line with estimates despite the EPS shortfall.
- Altria continues to lean on alternative nicotine products as a component of its growth strategy, even as combustible cigarette dynamics remain the primary driver of near-term results.
Detailed results
- Adjusted EPS: $1.48 (LSEG estimate: $1.50)
- Revenue net of excise taxes: $5.36 billion (up 1.2%; estimate: $5.35 billion)
- Marlboro shipment volumes: down 7.4% in the three months ended June 30
- On! nicotine pouches shipment volumes: down 4.2% in the same period
- Discount cigarette shipment volumes: up 67.3% in the reported quarter
- Full-year EPS outlook: $5.61 to $5.72 (previous range: $5.56 to $5.72)
Market reaction
Following the results, Altria shares moved lower in premarket trading, reflecting investor focus on earnings per share and margin pressures from the mix shift toward lower-priced products.