Marlboro annual profit and share price decline as consumers shift to cheaper brands

According to a Reuters report on the 26th, tobacco giant Altria Group lowered its annual profit forecast as more smokers switched from its premium cigarettes to cheaper brands or smoking alternatives, sending shares of the Marlboro maker lower.

The company said it now expects adjusted earnings per share of $4.91 to $4.98 this year, compared with its previous forecast of $4.89 to $5.03.

Marlboro has been raising prices on its traditional products to offset falling sales, as many consumers concerned about health risks have turned to newer options such as vaping devices or oral nicotine.

But the price increases hurt Marlboro’s market share, Altria said, as inflation-conscious consumers tried to save money by switching to cheaper brands such as USA Gold.

Net revenue from tobacco products fell 5.3% in the third quarter, as higher pricing only partly offset lower shipment volumes and increased promotional investment.

Altria is also continuing to push smoking alternatives. After its disastrous vaping attempt through an investment in JUUL Labs in 2018, it acquired the pod-based vaping device NJOY ACE in June.

However, NJOY still trails far behind Juul in market share, and Altria said reported shipments of NJOY ACE were about 7.5 million in the third quarter.

Overall, according to data from the London Stock Exchange Group (LSEG), Altria’s third-quarter net revenue excluding excise taxes was $5.28 billion, slightly below analysts’ expectations.