Altria Group Inc. (MO.N), the Marlboro maker that’s been diversifying into cannabis and vaping, fell after reporting first-quarter results that disappointed Wall Street.
Revenue excluding excise taxes missed the lowest analyst estimate. It also said industry-wide cigarette volumes will keep falling this year.Key Insights
The company’s cigarette shipments plummeted 14.3 per cent in the first quarter, after a 4.4 per cent slide the previous period, mirroring a wider industry trend toward alternative products. The faster pace of decline signals the company may need to ramp up its investments in other product lines. It now expects industry-wide cigarette sales to fall between 4 per cent and 5 per cent this year, compared to the wider 3.5 per cent to 5 per cent range it had forecast at the start of the year. Further declines in cigarette sales could be ahead amid a growing movement to stop selling tobacco products to buyers under 21. Altria has been waiting for federal approval to market Philip Morris International Inc.’s IQOS cigarette-alternative in the U.S., but it gave no new updates on that timeline Thursday. Altria has said it’s still committed to the deal, despite having taken a stake in Juul Labs Inc., which has a vaping device that some see as a competing product. Investors looking for more information have plenty of chances ahead: There’s an earnings call coming later this morning, plus an annual meeting slated for May 16.
Market Reaction
Shares fell as much as 7.3 per cent to US$50.70 -- the most intraday in three months. They’d gained about 11 per cent this year through Wednesday’s close, shy of the S&P 500’s 18 per cent rise. Get more on the numbers here. Read the company statement here.
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