Altria (MO): A glimpse into how the tobacco giant fared in the third quarter of 2023

Shares of Altria Group, Inc. (NYSE: MO) gained slightly on Friday. The stock has dropped 13% year-to-date. The company’s third-quarter 2023 earnings results managed to surpass projections but this was overshadowed by the lowering of its full-year earnings guidance. The full-year guidance takes into account planned investments in support of smoke-free products.

Quarterly performance

Altria’s net revenues declined 4.1% year-over-year in Q3 2023 to $6.3 billion. Adjusted EPS remained unchanged at $1.28 compared to the prior-year period. Despite this, both the top and bottom line numbers exceeded expectations.  

Category performance

Revenues in the third quarter were impacted by a decline in smokeable products revenue, which was down 5.3% due to lower shipment volume and higher promotional investments. Domestic cigarette shipment volume decreased 11.6% in the quarter due to impacts from macroeconomic pressures on adult tobacco consumers’ (ATC) disposable income and the growth of illicit e-vapor products as well as retail share losses.

Oral tobacco products revenue grew 2.2% in Q3, driven by higher pricing. Total US oral tobacco category share for on! nicotine pouches was 6.9%, up 1.7 percentage points YoY. The US nicotine pouch category grew to 32.3% of the US oral tobacco category, and on!’s share of the nicotine pouch category stood at 21.4%.

NJOY

Altria is working on the expansion of NJOY ACE, which is currently the only pod-based e-vapor product that has received marketing authorization from the FDA. During the third quarter, ACE distribution grew to approx. 42,000 stores and is now distributed in all the top 25 convenience store chains by e-vapor volume. The company expects ACE distribution to reach 70,000 stores by year-end.

Outlook

The company narrowed its guidance for full-year 2023 adjusted EPS to a range of $4.91-4.98, representing a growth rate of 1.5-3.0% from an adjusted EPS base of $4.84 in 2022. The previous range for adjusted EPS was $4.89-5.03.