Altria Group Exceeds Expectations

(Reuters) – Altria Group (NYSE:MO) beat market expectations for third-quarter revenue and profit on Thursday, as robust demand for its nicotine pouches and e-cigarettes helped soften the impact on its cigarette category.

Demand for Alternatives

Altria's NJOY vapes and on! nicotine pouches have seen steady demand in the United States, especially after its menthol-flavored NJOY vape products received authorization from the U.S. Food and Drug Administration (FDA) for sale.

Investors are closely watching big tobacco's shift toward alternatives to traditional cigarettes, as companies like Altria face weak demand for cigarettes and competition from local vape brands.

In July, Altria reported to the FDA on the growth of illegal nicotine pouches, highlighting the early stages of a significant black market for vapes.

Shipment Volumes

• Domestic cigarette shipment volume in the smokeable products segment fell by 8.6% in Q3.
• NJOY devices reported shipment volume increased over 100% year-over-year to 1.1 million units.
• Shipment volume for on! nicotine pouches rose by 46% in the quarter, while demand weakened for Copenhagen chewing tobacco products.

Altria's stock rose about 1% in premarket trade, with a year-to-date increase of 25%.

Long-term Plans

The company introduced a long-term strategy to enhance operational efficiency through generative artificial intelligence and automation, aiming for at least $600 million in cost savings over the next five years.

Financial Performance

Quarterly revenue, net of excise taxes, increased by 1.3% to $5.34 billion, beating analysts' expectations of $5.33 billion, according to LSEG data. Altria's third-quarter adjusted earnings per share stood at $1.38, surpassing market expectations of $1.35.

The company maintained its annual profit forecast of between $5.07 and $5.15 per share.

In contrast, Philip Morris (NYSE:PM) recently raised its annual profit target, citing strong demand for its IQOS heated tobacco device and ZYN nicotine pouches.