Altria Q2 2025: E-cigarette Unit Posts $108M Operating Loss; Nicotine Pouch on! Grows 26.5%

Key Points

•Net Revenue Performance: Q2 net income was $6.10 billion, a decrease of 1.7% year-on-year; total net income for the first half of the year was $11.36 billion, a decrease of 3.6% year-on-year. While overall revenue declined, core profitability indicators increased. 

•Business segment differences: 

Combustible tobacco: Q2 net income was $5.36 billion, a decrease of 2.5% year-on-year; adjusted operating profit increased by 4.2%, with a profit margin of 64.5%.

Oral tobacco: Q2 net income of $753 million, a year-on-year increase of 5.9%, with on! brand shipment volume increasing by 26.5%;

E-cigarette company Q2 reported a net income of -$8 million, operating loss of $108 million, and a goodwill impairment of $873 million in the first half of the year.

•Full Year Outlook: Adjusted diluted earnings per share expected to narrow to $5.35-5.45, a year-over-year increase of 3.0%-5.0%, with growth expected to slow down. 

•Shareholder Returns: Over $4 billion in returns were brought to shareholders in the first half of the year through dividends and stock buybacks.

According to the official website of Altria Group, on July 30th, the company released its operating performance for the second quarter and first half of 2025, while also narrowing its full-year adjusted diluted earnings per share (EPS) expectations for 2025.

Second quarter (Q2) performance highlights:

Net Revenues were $6.10billion, a decrease of 1.7% compared to the same period last year. 

Net Earnings were $2.38 billion, a significant decrease compared to the previous year, mainly due to a one-time disposal gain from the sale of commercialization rights for IQOS in the 2024 financial report. 

Adjusted Diluted EPS, excluding the disposal project, was $1.44, representing an 8.3% year-over-year growth, reflecting the profitability of the company's core business.

Overview of First Half (H1) Performance:

Net Revenues: The cumulative net revenues for the first half of 2025 were $11.361 billion, a 3.6% decrease compared to the previous year. 

Net Earnings: The cumulative net earnings for the first half of the year were $3.455 billion. 

Adjusted Diluted EPS: The cumulative adjusted diluted earnings per share for the first half of the year were $2.67, a 7.2% increase compared to the previous year.

Performance of each business segment (key focus of the second quarter)

Smokeable products

Income and Profit: The net income for this business segment was $5.357 billion, a decrease of 2.5% compared to the previous year. Adjusted operating income (Adjusted OCI) increased by 4.2%, with a profit margin of 64.5%. 

Sales Volume and Market Share: The domestic cigarette shipment volume reported a decrease of 10.2%. The retail market share for the Marlboro brand is 41.0%.

Oral tobacco products

Income and Profit: The sector's net income was $753 million, a year-on-year increase of 5.9%. Adjusted Operating Income (Adjusted OCI) achieved a 10.9% growth.

Sales and market share: Growth was mainly driven by the nicotine pouch brand on!, which shipped 52.1 million cans, achieving a 26.5% increase. 

Shipments of traditional moist snuff (MST) brands Copenhagen and Skoal, on the other hand, both decreased by 7.7% and 8.8% respectively.

E-cigarette business and all other categories

Performance categorization: The performance of Altria's e-cigarette brand NJOY is included in the "all other" category. 

Financial data: This category recorded a net loss of $8 million and an operating loss of $108 million in this quarter. 

Reasons for analysis: The financial report indicates that the performance was severely impacted by the injunction issued by the U.S. International Trade Commission (ITC) prohibiting the importation and sale of NJOY ACE products in the United States. 

Additionally, in the first half of 2025, a non-cash impairment charge of up to $873 million was also recognized for the e-cigarette business unit. 

Future prospects

The company has adjusted its full-year diluted earnings per share forecast for 2025 to narrow to between $5.35 and $5.45, based on a 2024 baseline of $5.19, representing a growth rate of 3.0% to 5.0%. The company anticipates that earnings growth will slow down following the completion of accelerated stock buyback plans in 2024 and a decrease in the number of shares due to the expiration of legal funds from the fourth quarter overall settlement agreement.

This guidance is based on the current available tariff information, considering the estimated impact of tariff increases on costs. In addition, the guidance assumes that enforcement actions against products that evade regulatory procedures (illegal) will have limited impact on sales of combustible and electronic vapor products, and that ACE will not return to the market by 2025. The scope of the guidance also includes reinvesting anticipated cost savings related to the previously announced "Optimize and Accelerate" plan, as well as reducing expected net periodic income.

Additionally, the company continues to expect that the adjusted effective tax rate for the full year of 2025 will be between 23% and 24%, capital expenditures in 2025 will range from $175 million to $225 million, and depreciation and amortization expenses in 2025 will be approximately $290 million.

Altria CEO Billy Gifford stated, "In the second quarter, the company continued to pursue its vision while maintaining strong and profitable core businesses. Our smokeable products segment, in particular, showed strong performance and was a key driver of growth this quarter. Through dividends and stock buybacks in the first half of the year, we have delivered over $4 billion in returns to our loyal shareholders.

Cover image source: Sina Finance.