Altria expands sales of heated-cigarette as revenue slides

Full Screen
1 / 2

Copyright 2019 The Associated Press. All rights reserved

FILE - This Nov. 25, 2019 photo shows IQOS heated cigarette heatsticks displayed in an IQOS store in Richmond, Va. Altria said Tuesday, July 28, 2020, that cigarette sales continue to decline as it pushes to expand sales of an alternative heated-tobacco product. The tobacco giant's second-quarter profit fell slightly but still beat Wall Street expectations when adjusted for one-time expenses. (AP Photo/Steve Helber, File)

WASHINGTON – Marlboro-maker Altria said Tuesday that cigarette sales continued to decline in its last quarter as the company pushed to expand sales of an alternative heated-tobacco product.

The Richmond, Virginia-based company reported second-quarter profit of $1.94 billion, or $1.04 per share, down 2.8% from the same period last year. Adjusted for one-time costs, the company would have earned $1.09 per share, better than the average Wall Street estimate of $1.06, according to Zacks Investment Research

The company said revenue fell 3.8% to $6.37 billion in the period. Adjusted revenue was $5.06 billion, which did not meet Street forecasts.

Sales were pressured by lower shipments of cigarettes, including brands like Marlboro and Parliament, which fell 8.8% through the end of June. Results were also hit by $50 million in charges related to business disruptions tied to COVID-19.

For 2020, Altria Group Inc. expects full-year earnings between $4.21 to $4.38 per share, representing growth ranging between 0% and 4%.

Altria has been working for years to shift more of its business away from traditional tobacco products amid steady declines. The company took a roughly $13 billion stake in beleaguered e-cigarette make Juul Labs, which has been hit by a wave of lawsuits and regulatory restrictions due to underage use of its high-nicotine vape pods.

Separately, Altria is expanding marketing of a heat-not-burn cigarette alternative, IQOS, to Charlotte, North Carolina, this month. The company said Tuesday it plans to expand marketing to four more cities over the next year and a half.

Earlier this month federal regulators said IQOS could be marketed to smokers as reducing their exposure to deadly chemicals contained in traditional cigarettes. The electronic IQOS device, which heats cigarette-like sticks of tobacco, is made by Philip Morris International and sold in the U.S. by Altria.