(Bloomberg) -- Altria Group Inc. kicked off a plan to cut at least $600 million of costs over the next five years as the tobacco group maintained its outlook for the year.
The maker of Marlboro cigarettes said Thursday that its new Optimize & Accelerate initiative aims to increase the group’s speed and operational efficiency with cost savings invested back into the business.
Altria still expects to deliver adjusted diluted earnings per share in the range of $5.07 to $5.15 this year, the company said as it reported third-quarter sales that met Wall Street’s estimates.
Revenue, excluding excise taxes, was $5.34 billion during the period, which is in line with the average analyst estimate compiled by Bloomberg. Adjusted diluted earnings per share slightly beat expectations, coming in at $1.38 versus forecasts of $1.35.
The shares rose 3.8% at 9:33 a.m. in New York, the largest intraday gain since March 6. The stock is up 25% this year through Wednesday’s close, surpassing the S&P 500 Index.
Altria said the volume of cigarette and cigar sales fell by 8.4% in the quarter, driven by a wider trend as people shift from combustible tobacco products. Sales of smokeless alternatives are rising, however, with e-vapor cartridge shipment volume increasing 15.6%. Device shipments also doubled and market share has risen, the company said.
Oral tobacco products, such as nicotine pouches, performed well in the US with Altria’s on! pouches now holding 8.9% of the market, which is up on the prior year.
Like rivals, Altria is turning to alternatives to lessen its dependence on cigarettes and amid growing concern about the health impact of tobacco.
Earlier this month, rival Philip Morris International Inc. raised its annual profit forecast due to soaring demand for its Zyn nicotine pouches in the US. On Tuesday, PMI said it was closing two German factories due to falling tobacco sales across Europe.
“At the start of this year some doubted, very loudly, that Altria would be able to maintain its earnings guidance for 2024,” said Rae Maile, analyst at Panmure Liberum. “We have reached the third-quarter stage without a change, increasing the odds of that guidance being realized we would humbly suggest.”
(Updates with opening shares in the fifth paragraph.)
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