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Introduction & Market Context
Altria Group (NYSE:MO) presented its second quarter and first half 2025 results on July 30, showcasing strong financial performance despite ongoing challenges in traditional tobacco categories. The company’s stock rose 1.09% to close at $59.36 on July 29 ahead of the earnings release, with premarket trading on July 30 showing an additional 0.66% gain to $59.75.
The tobacco giant continues to navigate industry headwinds through effective pricing strategies and growing its smoke-free portfolio, particularly with its on! nicotine pouches showing significant momentum. This performance comes as the broader tobacco industry faces accelerating volume declines and regulatory pressures.
Quarterly Performance Highlights
Altria reported adjusted diluted earnings per share of $1.44 for Q2 2025, representing an 8.3% increase compared to the same period last year. For the first half of 2025, adjusted EPS reached $2.67, up 7.2% year-over-year, continuing the positive trend seen in Q1 when the company beat analyst expectations.
As shown in the following chart of Altria’s quarterly and first-half adjusted EPS performance:
The company’s smokeable products segment, which includes cigarettes and cigars, delivered adjusted operating companies income (OCI) of $2.95 billion in Q2 2025, a 4.2% increase from Q2 2024. For the first half, adjusted OCI in this segment reached $5.47 billion, up 3.5% year-over-year.
The following chart illustrates this growth in the smokeable products segment:
More impressively, Altria expanded its smokeable products segment adjusted OCI margins to 64.5% in Q2 2025, representing a 2.9 percentage point increase compared to the same period last year. First-half margins showed similar strength, also reaching 64.5% and up 3.5 percentage points year-over-year.
This margin expansion is clearly depicted in the following chart:
Smokeable Products Performance
Despite the financial strength, Altria continues to face volume challenges in its core cigarette business. The company’s smokeable products segment saw an adjusted volume decline of 10.5% in Q2 2025 and 11.0% for the first half, significantly outpacing the industry-wide decline rates of 8.5% for both periods.
The following chart shows the comparison between Altria’s cigarette volume declines and the broader industry:
Marlboro, Altria’s flagship brand, experienced a 0.9 percentage point year-over-year decline in retail share, falling to 41.0% in Q2 2025. However, the brand maintained its strong position in the premium segment with a 59.5% share, up 0.2 percentage points from the prior year.
The company noted that discount cigarettes continue to gain market share, reaching 31.2% of the total market in Q2 2025, up from 29.3% in Q2 2024. This trend reflects ongoing economic pressures on consumers, though Altria’s PM USA cigarette retail share increased slightly to 45.2% in Q2 2025 from 45.0% in Q1 2025.
Smoke-Free Products Strategy
Altria’s oral tobacco products segment showed strong financial performance despite volume challenges. Adjusted OCI for this segment reached $500 million in Q2 2025, a 10.9% increase year-over-year, while adjusted OCI margins expanded to 68.7%, up 3.1 percentage points.
The following chart illustrates this impressive financial performance in the oral tobacco segment:
The on! nicotine pouch brand continues to be a bright spot in Altria’s portfolio, with shipment volume increasing 26.5% to 52.1 million cans in Q2 2025. This growth comes as the broader oral tobacco category experiences significant expansion, with industry volume growth of 11.0% for the first half of 2025.
As shown in the following chart of oral tobacco category growth and on! shipment volume:
The on! brand is also gaining market share within the oral tobacco category, reaching 8.7% in Q2 2025, a 0.7 percentage point increase from the prior year. This growth is supported by increased brand awareness and marketing efforts.
The following chart illustrates on!’s share momentum:
Regarding its e-vapor business, Altria provided an update on NJOY, noting that in June, the Patent Trial and Appeal Board did not agree with the company’s argument to invalidate JUUL’s patent. However, Altria has completed the product design of a modified NJOY ACE solution that it believes addresses all four disputed patents. The company is also actively building out a broader vapor portfolio with products that align with evolving consumer expectations.
Financial Outlook & Shareholder Returns
Altria raised the lower end of its full-year 2025 guidance and now expects to deliver adjusted diluted EPS in a range of $5.35 to $5.45. This range represents an adjusted diluted EPS growth rate of 3.0% to 5.0% from a base of $5.19 in 2024.
The following slide outlines Altria’s updated financial outlook:
The company continues to prioritize shareholder returns, having paid $3.5 billion in dividends during the first half of 2025. Additionally, Altria repurchased 10.4 million shares for $600 million, with $400 million remaining under its currently authorized share repurchase program, which it expects to complete by the end of this year. The company’s debt-to-EBITDA ratio stood at 2.0x as of June 30, 2025, indicating a strong balance sheet.
Regulatory Environment
Altria highlighted positive enforcement actions against illicit e-vapor products, including FDA strengthening its importation policy, tighter border controls, and warning letters to importers of illicit products. The company continues to advocate for a fully regulated nicotine marketplace, emphasizing the need for enforcement against rule-breakers and accelerated product authorizations to establish a legal market of smoke-free alternatives.
The company noted that flavored disposable products are driving e-vapor category growth, with the number of adult vapers using disposable products increasing from 7.7 million in June 2023 to 14.4 million in June 2025. This trend underscores the importance of Altria’s efforts to develop competitive products in this space while navigating the complex regulatory landscape.
In conclusion, Altria’s Q2 2025 results demonstrate the company’s ability to deliver strong financial performance despite accelerating volume declines in traditional tobacco categories. The growth of on! nicotine pouches and the company’s strategic focus on smoke-free products position it to continue navigating industry challenges while delivering value to shareholders.
Full presentation:
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