Marlboro parent Altria revenue falls short as cigarette shipments decline, buys rest of On nicotine pouch

• First-quarter earnings exceeded analysts' estimates, as the tobacco company continues to grow its non-combustible business.
• However, after excluding excise taxes, Altria's revenue fell short of expectations.
• The company announced it acquired the remaining 20% stake in On, a nicotine pouch product.

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Altria first-quarter earnings declined as revenue fell short of estimates as cigarette shipments continue to decline.

The parent of Marlboro cigarettes has been shifting its business away from traditional tobacco products, and announced it acquired the remaining 20% stake in On, a nicotine pouch product.

The company's stock rose less than 1% in premarket trading.

Here's what the company reported for the first quarter compared with what Wall Street was expecting, based on a survey of analysts by Refinitiv:

• Earnings per share: $1.07 adjusted vs. $1.05 expected
• Revenue: $4.88 billion, excluding excise taxes, vs. $4.98 billion expected

Net income decreased to $1.42 billion, or 77 cents per share, from $1.55 billion, or 83 cents per share, a year earlier. 

Excluding items, Altria earned $1.07 per share, topping the $1.05 per share expected by analysts surveyed by Refinitiv. 

Revenue fell 5.1% to $6.04 billion from $6.36 billion a year ago. However, after excluding excise taxes, its revenue was $4.88 billion, which was shy of the $4.98 billion, analysts expected.

Total cigarette shipments fell 12% year over year, as smoking rates decline.

Altria once again lowered the value of its Juul vaping brand, writing its value down by another $200 million. The company said the fair value of its stake, which it acquired for $12.8 billion in December 2018, was worth $1.5 billion at the end of March.

Although the total vaping category increased 24% year-over-year, Juul's retail share fell 6% year-over-year to 33% of the category, the company said.

"Against a challenging comparison, our tobacco businesses performed well in the first quarter and we continued to make progress advancing our non-combustible portfolio," said Billy Gifford, Altria's chief executive, in a press release.

The Food and Drug Administration, which regulates tobacco products in the U.S., may be approaching a ban on menthol cigarettes as early as this week after years of deliberation. Menthol cigarettes have often been disproportionately used by people of color. The vast majority of Black smokers use menthol cigarettes, and Black men have the highest rates of lung cancer deaths in the U.S.

In addition, the Biden administration announced last week that it is considering placing a cap nicotine levels in cigarettes. If this policy is pursued, tobacco companies are likely to challenge it.

Altria previously sent a letter to the FDA asking them to spread the word that nicotine, the addictive ingredient in cigarettes, doesn't cause cancer. The company said this would help smokers transition to potentially less risky non-combustible options, such as their heated tobacco stick Iqos and nicotine pouch On.

See the full earnings release here.

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