WASHINGTON -- In a story July 30 about tobacco company Altria, The Associated Press erroneously identified the company as the producer of a heat-not-burn tobacco product called iQOS. The product is made by Philip Morris International and will be marketed in the U.S. by Altria.
A corrected version of the story is below:
Altria shares fall on weaker outlook for cigarettes
Altria shares fall as tobacco giant predicts steeper declines for cigarettes
By MATTHEW PERRONE
AP Health Writer
WASHINGTON (AP) — Shares of Altria Group fell Tuesday as the nation's largest tobacco company predicted steeper declines for cigarettes in coming years.
The Richmond, Virginia-based company reported second-quarter earnings of roughly $2 billion, or $1.07 per share. Earnings, adjusted for asset impairment costs and non-recurring costs, were $1.10 per share.
The results matched Wall Street expectations, according to analysts surveyed by Zacks Investment Research.
But company executives forecast a bigger drop for cigarette demand in years ahead, with annual volume declines between 4% and 6% through 2023. That's slightly greater than previous expectations of 4% to 5%.
Altria shares fell $1.81, or 3.6%, to $48.50 Tuesday.
In April, federal regulators approved the sale of a heat-not-burn cigarette alternative, iQOS, made by Philip Morris International. Altria will market the product in the U.S. under a licensing deal. Altria has also bought a 35% stake in the vaping juggernaut Juul, which has come under scrutiny for its popularity with teenagers.
Altria CEO Howard Willard said some of the declines in cigarettes are due to more smokers switching to Juul and other electronic cigarettes, battery-powered devices that vaporize a flavored nicotine solution.
"We believe this reflects both increased availability of satisfying e-vapor products that began mid-year 2018 and higher levels of exclusive e-vapor use," Willard told analysts.
Altria estimates the U.S. vaping market has grown 40% over the last year, almost exclusively driven by Juul.
Last week Juul's co-founder James Monsees weathered tough questions about the company's products and marketing practices during a congressional hearing on the recent explosion of underage vaping. He acknowledged the company made "missteps" but "never wanted" young people to use Juul.
Willard noted that Altria and Juul are supporting federal legislation to raise the age to purchase all tobacco products, including e-cigarettes, to 21.
Tobacco industry critics have suggested Altria is supporting the age restrictions, in part, to head off harder-hitting proposals that would ban all flavored vaping products and menthol cigarettes
The owner of Philip Morris USA, the nation's largest cigarette maker, said revenue increased 5% to $6.62 billion, mainly driven by higher prices. Its adjusted revenue was $5.19 billion, topping Street forecasts. Five analysts surveyed by Zacks expected $5.05 billion.
The company reaffirmed its full-year earnings in the range of $4.15 to $4.27 per share.
Elements of this story were generated by Automated Insights (http://automatedinsights.com/ap) using data from Zacks Investment Research. Access a Zacks stock report on MO at https://www.zacks.com/ap/MO