By Timothy S. Donahue
Top Takeaways:
- Profit pressure: Altria missed second-quarter adjusted earnings estimates as premium cigarette and nicotine pouch demand weakened despite revenue topping Wall Street expectations.
- Consumer shift: Higher living costs continued driving smokers toward lower-priced cigarette brands, while on! nicotine pouch shipments declined amid intensifying competition.
- Guidance intact: The company modestly tightened its 2026 adjusted earnings outlook while continuing to invest in smoke-free products despite NJOY ACE remaining off the U.S. market.
Altria Group reported mixed second-quarter results Thursday, beating revenue expectations but falling short on adjusted earnings due to economic pressures impacting demand for its premium tobacco products and intensified competition in the rapidly growing nicotine pouch category.
“In the second quarter, our operating companies continued to deliver against the priorities we outlined at the start of the year – advancing our smoke-free portfolio, strengthening our traditional tobacco businesses and delivering significant returns to shareholders,” said Sal Mancuso, Altria’s Chief Executive Officer.
The Richmond, Virginia-based company reported adjusted diluted earnings per share of $1.48, below Wall Street expectations of $1.50. Net income declined to $2.3 billion, or $1.37 per share, from $2.38 billion, or $1.41 per share, a year earlier. Revenue reached $6.11 billion, topping analyst expectations, while revenue net of excise taxes increased to approximately $5.36 billion.
The results showed ongoing pressure on Altria’s premium cigarette business. Shipment volume for Marlboro fell 7.4% during the quarter, although this decline was less severe than the 11.4% drop recorded a year earlier.
At the same time, shipment volumes for the company’s discount cigarette brands jumped 67.3%, underscoring a growing shift by adult smokers toward lower-priced products. Executives said macroeconomic uncertainty tied in part to the conflict in the Middle East has continued to affect consumer spending patterns.
The company’s smoke-free portfolio faced challenges as well. Shipment volumes for on! nicotine pouches declined by 4.2% due to intensified competition, particularly from category leader ZYN. Altria announced that its Helix subsidiary plans to introduce additional flavor extensions for on! in the fourth quarter to strengthen the brand’s position.
Meanwhile, NJOY ACE remains unavailable in the U.S. market because of an ongoing patent-related import ban, limiting Altria’s ability to compete in the vapor category.
“In smoke-free, Helix expanded on! PLUS to 120,000 stores nationwide, engaged in trial-generating activities and prepared for additional line extensions to come later this year,” said Mancuso. “In smokeable products, PM USA advanced its data-driven, total portfolio approach to drive profitability as Marlboro Cowboy Cut generated strong interest among premium smokers and Basic continued to gain traction in discount.”
Despite a softer quarter, Altria modestly narrowed its full-year adjusted diluted EPS guidance to a range of $5.61 to $5.72, raising the lower end while maintaining the upper end. Management expects stronger benefits from cigarette trade activity in the second half of the year.
Shares fell sharply following the earnings release.
