Marlboro cigarettes manufactured by Philip Morris International
Daniel Acker | Bloomberg | Getty Images
After years of accelerated smoking decline, tobacco giant Altria said it saw a reversal in the trend as US cigarette volumes across the industry were flat compared to the previous year.
However, the company declined to make any prediction on how things would turn out in 2021, as it is unclear whether the factors that contributed to this trend would continue.
The pandemic caused more people to hide in their homes, giving smokers more opportunities to take a break from their hectic days and to light up more often, especially amid the overall higher stress and anxiety levels resulting from the economy and the health crisis. Workers from home were no longer in smoke-free offices and consumers generally had more disposable income from restrictions on other forms of entertainment, such as restaurants and bars, movie theaters and travel.
The trend was more pronounced in Altria’s own company. The total cigarette shipment volume for the Marlboro maker was 0.4% lower than in 2019 and 3.1% higher in the fourth quarter. In comparison, Altria’s cigarette volume from 2018 to 2019 decreased by 7.3%.
Altria said it is paying close attention to trends that could affect future cigarette sales.
“Looking ahead, we expect volume trends in the cigarette industry in 2021 to be most affected by smokers’ stay-at-home rates, unemployment rates, tax incentives, cross-category moves, the timing and breadth of COVID-19 vaccine deployment and consumer purchasing habits according to vaccine, ”Altria said in a conference call about earnings.
In light of the expected decline in smoking, Altria has invested in alternatives to cigarettes, such as the heated tobacco product iQos and nicotine pouches.
Altria shares closed 1.98% up at $ 42.65 on Thursday. The stock is down nearly 15% in the past year, putting it at a market value of $ 79.26 billion.
In the fourth quarter, the company reported net income of $ 1.92 billion, or $ 1.03 per share, compared to a loss of $ 1.81 billion a year ago. Excluding items, Altria earned 99 cents a share, which was lower than analysts expected. Sales were better than expected, rising from $ 6 billion a year ago to $ 6.3 billion.
For 2021, the company expects to earn $ 4.49 to $ 4.62 per share after adjustments.