Altria posts lower-than-expected quarterly results on muted cigarette demand

(Reuters) – Altria (NYSE:) missed expectations for quarterly revenue and profit on Wednesday, as the tobacco giant contends with persistent weakness in demand for its cigarette brands.

Shares of the company, which have risen 25% so far this year, were down 2% in premarket trade.

The Marlboro maker, similar to other tobacco peers, has bet heavily on smoking alternatives as stricter regulation and awareness of health risks have dented demand for traditional cigarettes in some markets.

Total shipments of cigarettes fell 13% in the second quarter as demand for its more expensive brands came under pressure, with cash-strapped consumers looking towards cheaper alternatives or vapes.

Altria also said promotions on its brands had hurt revenue.

The company’s adjusted earnings per share of $1.31 fell short of estimates of $1.35, as per LSEG data.

Quarterly revenue, net of excise taxes, fell 3% to $5.28 billion, missing estimates of $5.39 billion.

The company’s menthol flavored NJOY vape products became the first flavored vapes to get sale authorization from the U.S. Food and Drug Administration last month.

Reported shipment volume for NJOY devices rose 80% sequentially in the reported quarter ended June 30.

The U.S. regulator has rejected a vast majority of the 26 million applications it has reviewed so far, including from British American Tobacco (NYSE:), and all of those relating to flavored products.

Still, Altria has had to tackle stiff competition from cheaper disposable alternatives in the vapes category.

In the oral tobacco category, it has dealt with several quarters of weakness in dipping tobacco products such as Copenhagen.

Shipment volume for on! nicotine pouches, however, grew 37.3% compared with a year earlier, following a 32% rise in the preceding quarter.

Altria tightened its forecast for annual profit per share to between $5.07 and $5.15, compared with an earlier target of $5.05 to $5.17.