Altria Q1 2025 slides: on! growth accelerates as company navigates e-vapor challenges

Introduction & Market Context

Altria Group (NYSE:MO) presented its first-quarter 2025 earnings on April 29, highlighting continued progress in its smoke-free transition strategy despite challenges in the e-vapor segment. The company maintained its full-year guidance while reporting mixed results across its product portfolio, with strong growth in oral nicotine pouches offsetting declines in traditional tobacco products.

The tobacco giant continues to execute its "Moving Beyond Smoking" strategy amid an evolving regulatory landscape and shifting consumer preferences. Altria’s stock was trading at $57.15 in pre-market, down 1.79% following the earnings release.

Smoke-Free Transition Momentum

Altria’s on! oral nicotine pouches demonstrated impressive growth, with shipment volume increasing 18.0% to 39.3 million cans in Q1 2025 compared to 33.3 million in the same period last year.

As shown in the following chart of on! shipment volume growth:

This volume growth translated into market share gains, with on! increasing its share of the oral tobacco category by 1.8 percentage points to 8.8% in Q1 2025. The brand’s marketing efforts have also shown significant results, with impressions growing approximately five-fold from ~40 million in Q1 2024 to ~200 million in Q1 2025.

The company’s overall oral tobacco segment is undergoing a transition, with traditional moist smokeless tobacco (MST) products declining while on! grows. This shift is clearly illustrated in the retail share breakdown:

E-Vapor Challenges

Altria faced significant headwinds in its e-vapor business, recording a non-cash impairment charge of $873 million related to its NJOY ACE products. This impairment resulted from an International Trade Commission ( ITC (NSE:ITC)) exclusion order that took effect on March 31, following patent litigation.

The company indicated it continues to work on finalizing a product solution that addresses all four patents in question and intends to appeal the ITC’s decision.

Beyond its own product challenges, Altria highlighted the ongoing issue of illicit products dominating the e-vapor category. The company’s data shows significant growth in disposable e-vapor products, many of which are unauthorized:

Altria emphasized its focus on addressing illicit e-vapor products through regulatory advocacy, engagement with Congress and administration officials, and supporting state-level legislative remedies.

Traditional Tobacco Performance

Despite volume challenges, Altria’s smokeable products segment delivered improved financial results. Adjusted operating company income (OCI) increased 2.7% to $2,518 million, with margins expanding 4.2 percentage points to 64.4%.

However, the company’s cigarette volume declines accelerated, with the smokeable products segment reporting a 12.0% decline in Q1 2025 compared to 10.0% in Q1 2024. This exceeded the industry-wide decline rate of 9.0%, suggesting continued market share pressure.

The following chart illustrates these decline rates:

Marlboro, Altria’s flagship brand, saw its retail share decline by 1.0 percentage point to 41.0%, though it maintained its dominant position in the premium segment with a 59.3% share.

The company also reported continued growth in discount cigarette segments, with deep discount cigarettes reaching 15.4% market share in Q1 2025, nearly matching branded discount at 15.5%.

Financial Outlook & Shareholder Returns

Altria reaffirmed its 2025 full-year adjusted diluted earnings per share guidance of $5.30 to $5.45, representing growth of 2% to 5% from $5.19 in 2024.

The company continued its strong shareholder return program, paying $1.7 billion in dividends during the first quarter and repurchasing 5.7 million shares for $326 million. Altria reported $674 million remaining under its current share repurchase authorization, which it expects to complete by the end of 2025.

The company’s balance sheet remains solid with a 2.1x total debt-to-EBITDA ratio as of March 31, 2025.

Strategic Initiatives

Looking ahead, Altria emphasized the importance of competing in the e-vapor category with products that align with evolving consumer expectations. The company stated it is combining talent and capabilities gained from the NJOY acquisition with its updated understanding of today’s vapers to broaden NJOY’s pipeline of innovative e-vapor products.

Altria also continues to develop its broader smoke-free portfolio, which includes Black & Mild cigars, Copenhagen moist smokeless tobacco, on! nicotine pouches, NJOY e-vapor products, and Ploom heated tobacco.

The company remains focused on its mission to "responsibly lead the transition of adult smokers to a smoke-free future," though challenges in the regulatory environment and competitive landscape continue to impact the pace of this transition.

Full presentation:

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