Altria Misses Q2 Profit Estimates as Smokers Shift to Cheaper Brands

Altria Group (NYSE:MO) reported second-quarter earnings that fell short of analyst expectations, as financially-strained consumers opted for cheaper cigarettes over the company's premium Marlboro brand. This consumer "down-trading" also weighed on demand for its smoke-free products, sending shares down in premarket trading.

Earnings by the Numbers

The tobacco giant posted an adjusted earnings per share of $1.48 for the three months ending June 30, missing the consensus estimate of $1.50 per share, according to LSEG data. Altria's shares fell by 3% in premarket trading following the announcement.

However, second-quarter revenue net of excise taxes saw a slight increase of 1.2% to $5.36 billion, narrowly beating analysts' estimate of $5.35 billion.

Consumer Shift Hits Premium Volumes

The results highlight a significant shift in spending patterns, which the company has previously linked to higher fuel and living costs. This trend was evident in shipment volumes, where demand moved sharply from premium to discount offerings.

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• Shipment volumes for the flagship Marlboro brand fell by 7.4%.
• In contrast, shipments for discount cigarettes surged by 67.3%.
• The pressure also extended to Altria's growth-focused alternatives, with shipment volumes for On! nicotine pouches declining by 4.2%.

Updated Full-Year Guidance

Despite the quarterly profit miss, Altria updated its outlook for the full year. The company now expects its adjusted earnings per share to be in the range of $5.61 to $5.72.

This revised forecast represents a narrowing of its previous target of $5.56 to $5.72, effectively raising the lower end of its full-year earnings guidance.