Altria 1Q Earnings Miss As Cigarette Sales Continue To Slide
Altria’s investment in Cronos is partly to blame for the slide
Shares of Altria Group, the nation’s largest tobacco company, fell Thursday after the company’s earnings missed expectations on lower cigarette revenue and big expenses aimed at diversifying its business.
The Richmond, Virginia-based company reported first quarter profit of $1.12 billion, or 60 cents per share. Adjusted for one-time costs and expenses the company earned 90 cents per share.
That fell short of Wall Street expectations of 92 cents per share, according to an analyst survey by Zacks Investment Research.
Altria, the maker of Marlboro cigarettes and Copenhagen chew, has been working to shift its business away from traditional tobacco products amid steady declines in the category. The U.S. smoking rate has been falling for decades amid smoking bans, higher taxes and public health efforts urging smokers to quit and discouraging young people from ever starting.
But Altria said cigarette shipments declined by 14%, faster than expected, pushing its revenue for Philip Morris USA and other smoking brands down 7%.
Company management reiterated full-year earnings in the range of $4.15 to $4.27 per share. Analysts expect $4.19 per share, according to FactSet.
Quarterly results were weighed down by $159 million in pretax expenses mainly tied to Altria’s investments in Canadian cannabis investment firm Cronos and Juul, the e-cigarette startup company.
Altria is betting those investments will help replace falling cigarette sales in years ahead. But they noted the company assumes “little-to-no earnings” from Juul or Cronos in the current year.
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