(Reuters) – Altria missed expectations for quarterly revenue and profit on Wednesday, as the tobacco giant struggles with continued weakness in demand for its cigarette brands.
The company’s shares, which are up 25% so far this year, were down 2% in pre-market trading.
The Marlboro maker, like other tobacco peers, has bet heavily on smoking alternatives as stricter regulations and awareness of health risks have hit demand for traditional cigarettes in some markets.
Total cigarette shipments fell 13% in the second quarter as demand for higher-priced brands came under pressure, with cash-strapped consumers seeking cheaper alternatives or vapes.
Altria also said promotions for its brands had hurt sales.
The company’s adjusted earnings per share of $1.31 fell short of estimates of $1.35, LSEG data showed.
Quarterly revenues, net of excise taxes, fell 3% to $5.28 billion, missing estimates of $5.39 billion.
The company’s NJOY menthol-flavored vape products became the first flavored vapes to receive sales authorization from the U.S. Food and Drug Administration last month.
Reported shipment volume for NJOY devices increased 80% sequentially in the reported quarter ended June 30.
The US regulator has rejected a large majority of the 26 million applications it has reviewed so far, including those from British American Tobacco and all those involving flavored products.
Still, Altria has faced stiff competition from cheaper disposable alternatives in the vape category.
In the oral tobacco category, the country has experienced several quarters of weakness in dipping tobacco products like Copenhagen.
Shipping volume ahead! However, nicotine pouches grew 37.3% from a year earlier, following a 32% increase in the previous quarter.
Altria tightened its forecast for annual earnings per share to $5.07 to $5.15, compared to a previous target of $5.05 to $5.17.
(Reporting by Juveria Tabassum and Emma Rumney; Editing by Krishna Chandra Eluri)