MO Altria Group Inc

By Austen Hufford 

Altria Group Inc.'s revenue declined in the latest quarter as the company lost share in a shrinking U.S. smoking market.

The company, which sells Marlboro cigarettes and other tobacco products in the U.S., saw its cigarettes U.S. retail market share decline to 50.2% in the second quarter from 50.9% in the same quarter a year before.

Revenue after excise taxes fell 3.7% and was below analyst expectations. In premarket trading, Altria shares fell 2.9%.

Big Tobacco has long been under threat from the steady decline of smoking, particularly in the developed world. But in recent years, the industry has been able to push through price increases to make up for falling volumes -- boosting profits and stock prices. That has enabled big investments aimed at developing smoking alternatives, like e-cigarette devices and other gadgets that promise to deliver nicotine but not the more harmful effects that come with lighting up.

In recent months, though, investor concerns about how consumers abroad have responded to cigarette alternatives have weighed on share prices. Philip Morris International Inc. and Altria are working on a device called IQOS, which is billed as a "heat not burn" product. While Philip Morris has rolled the product out in a number of international markets, Altria said Thursday that it is ready to deploy it in the U.S. if the Food and Drug Administration gives its approval.

The FDA said earlier this year that the science on the device's relative safety wasn't yet conclusive. The FDA has also been pushing a separate initiative to cut the nicotine content in traditional cigarettes to nonaddictive levels.

Altria said volumes in the U.S. cigarette industry declined 3.5% as the company's adjusted volume fell 5%.

Price increases weren't enough to offset the decline, leading to a total revenue decrease of 5.4% to $6.32 billion.

Profit came in at $1.88 billion, or 99 cents a share, compared with $1.99 billion, or $1.03 a share, in the same period a year before. Earnings per share adjusted for certain items came in at $1.01, a cent above what analysts polled by FactSet were expecting.

Shares of British American Tobacco PLC rose 5.1% in London trading on Thursday as the company said its cigarettes and tobacco-heating product portfolio had outperformed the industry.

Write to Austen Hufford at austen.hufford@wsj.com

Write to Austen Hufford at austen.hufford@wsj.com

(END) Dow Jones Newswires

July 26, 2018 08:45 ET (12:45 GMT)

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