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Altria and Philip Morris International, which split into two separate companies in 2008, are teaming up again on the manufacturing side. Altria will now produce traditional cigarettes for Philip Morris to sell in markets outside the United States.
This is a smart use of Altria's existing factories. As cigarette use in the U.S. continues to drop, Altria has more manufacturing capacity than it needs. By making products for another company, Altria can keep its machines running and earn extra profit from its infrastructure while it continues to shift its own focus toward smoke-free products like nicotine pouches.
Source: Business Wire
A law firm has started an investigation into whether the company was clear with investors about the regulatory status of its on! PLUS nicotine pouches. Specifically, they are looking at how likely it is that the FDA, the government agency that regulates tobacco, will approve these and other new products. This is worth watching because nicotine pouches are the core of the company's plan to replace falling cigarette sales. If there are surprises regarding how fast these products can get to market or how they are regulated, it could slow down the company's shift toward smoke-free products.
Source: PRNewsWire
The company reported earnings of $1.48 per share, just under the $1.50 that analysts expected. Revenue was about 5.36 billion dollars, which was right in line with what people were looking for. While the cigarette business remains a steady source of cash, lower sales of nicotine pouches weighed on profits this quarter.
Management narrowed its profit target for the full year to a range centered around $5.64 per share. The company is still focused on its shift to smoke-free products, expanding its on! PLUS pouches to 120,000 stores. For long-term owners, the main thing to watch is whether these new products can grow fast enough to make up for the slow, steady decline in traditional smoking.
See the full quarter, and how our tracked metrics did
Source: 8-K filing
Management consistently hits its targets by a few cents, showing they have a tight grip on the business even as cigarette use declines.
| Expectation | |
|---|---|
| EPS | $1.50 |
| Revenue | $5.32B |