Altria surprises positively: Nicotine pouches and e-cigarettes as revenue drivers

Altria Group exceeded market expectations in the third quarter, impressing both in terms of revenue and profit. In particular, the sustained high demand for the company's nicotine pouches and e-cigarettes helped cushion the decline in the cigarette segment. NJOY vapes and on! nicotine pouches are showing stable development in the US market, especially after the menthol-flavored NJOY products received approval from the US health authority. Investors in major tobacco companies are closely monitoring the shift towards alternatives to traditional cigarettes. Altria and its competitors face both weaker demand for cigarettes and stiff competition from local brands in the vape market. Interesting insights were already provided by Altria in July when they sent data to the FDA illustrating the growth of an illegal market for nicotine pouches. While domestic cigarette shipments in the smokable products segment fell by 8.6%, NJOY devices saw an increase of over 100% year-over-year, with a shipment volume of 1.1 million units. The shipment volume of on! nicotine pouches also increased by 46% during the quarter, while interest in products like chewing tobacco continues to decline. Shares of the Marlboro manufacturer rose by about 1% in pre-market trading, with a year-to-date increase of around 25%. Altria also presented a long-term plan to increase operational efficiency through generative artificial intelligence and automation, with expected savings potential of at least $600 million over the next five years. The company's revenue excluding excise taxes increased by 1.3% to $5.34 billion, surpassing analysts' expectations of $5.33 billion. Adjusted earnings per share were $1.38, also exceeding market forecasts of $1.35. The annual forecast for earnings per share remains stable at $5.07 to $5.15. Also noteworthy was the announcement by Altria competitor Philip Morris, which last week raised its annual earnings forecast. This was done in anticipation of strong demand for its IQOS device and ZYN nicotine pouches.