Washington (Associated Press)-Marlboro sales have driven Altria's revenue growth, although the tobacco giant has been dragged down by the charges for its huge business (including beer, wine and e-cigarettes).
During the pandemic, cigarette sales were better than other types of consumer products, and the overall income of Philip Morris American company owners was better than Wall Street expected. This is not the case for profits, because Altria has suffered losses elsewhere, including its investment in AB InBev.
The Virginia company reported a profit of $1.03, or 99 cents per share, after adjusting for a one-time expense. According to a survey of analysts by Zacks Investment Research, this is a few cents lower than Wall Street's expectations.
Altria also sells Copenhagen chewing tobacco and Saint-Michel wine, and reported revenue of US$6.3 billion. Its adjusted revenue was US$5.06 billion, which is still higher than expected.
CEO Billy Gifford vowed to advance Altria's long-term activities to shift its business from cigarettes to less harmful alternatives, including e-cigarettesand oral nicotine bags. After the long-term CEO and chairman of Howard Willard retired, Gifford took over last spring.
Gifford said on Thursday’s earnings conference call: “Our tobacco business is resilient and we have made steady progress in achieving our 10-year vision of responsibly transitioning adult smokers to a non-combustible future.”
Over the years, Altria has been committed to shifting more business away from traditional tobacco products where smoking rates have been steadily declining. The company acquired a huge US$13 billion stake in the troubled e-cigarette startup Juul Labs, which has been hit by a wave of lawsuits and regulatory restrictions due to the use of its high-nicotine e-cigarette compartment by minors.
The investment faces additional threats from federal regulators, who sued for the termination of the multi-billion-dollar transaction, claiming that the partnership is actually an agreement not to compete in the U.S. e-cigarette market. The case is expected to be heard in court later this year.
In addition, Altria is expanding the marketing of IQOS, an alternative to heat-not-burn cigarettes, to four new cities in 2021. This is part of the gradual introduction of the first device of its kind, and the Food and Drug Administration ruled that exposure to the deadly chemicals contained in cigarettes can be reduced.
The company has also expanded sales of the recently acquired nicotine bag on!, which is said to be sold in 78,000 retail stores.
Despite this, Altria still relies on cigarettes for most of its profits.
The company said that, driven by rising pricing and shipments, sales of cigarettes and cigars in the fourth quarter of 2020 increased by nearly 8% to US$5.56 billion. The company did not break its e-cigarette and IQOS businesses, but the "other" category, which includes these products on its balance sheet, lost $75 million in the last quarter.
Company executives declined to develop guidance for cigarette sales in 2021, noting the uncertain effects of unemployment, isolation, and possible stimulus payments.
Analysts also worry that Democratic control of Congress and the White House may lead to new regulations and taxes on tobacco and e-cigarette products.
Altria expects full-year earnings per share to be between US$4.49 and US$4.62.
The elements of this story were generated by Automatedinsights (http://automatedinsights.com/ap) using data from Zacks Investment Research. Access the Zacks Stock Report on MO at https://www.zacks.com/ap/MO