(Reuters) -Tobacco giant Altria forecast annual profit largely below market expectations on Thursday, hurt by lower demand for its cigarettes and oral smoking alternatives such as on! nicotine pouches.
Shares in the firm were down nearly 4% in premarket trading.
Tobacco, especially key brand Marlboro, still makes up the majority of Altria’s revenues and profit, but is in decline in the U.S.
Altria’s efforts to build a portfolio of smoking alternatives to offset lost cigarette sales have hit a series of hurdles, from regulatory problems and lawsuits to stiff competition from unregulated vapes, largely from China, that have taken over the U.S. market.
The company’s strategy suffered another blow earlier this year when it was forced to halt sales of vape brand NJOY due to a patent dispute. Altria does not expect NJOY to return to the market until next year.
While growth in on! remains a bright spot, it is not enough to offset the complete loss of NJOY and Altria’s tobacco declines, which sometimes exceed those of the broader market.
Revenue from smokable products was down 2.8% at $5.39 billion, while that of oral tobacco products fell 4.6% to $689 million.
Altria expects annual adjusted earnings in the range of $5.37 to $5.45 per share, midpoint of which is much below analysts’ average estimate of $5.44, according to data compiled by LSEG.
Net revenue for the third-quarter fell 3% to $6.07 billion from year ago levels, but comfortably beat analysts’ average estimate of $5.31 billion.
It logged an adjusted profit of $1.45 per share for the quarter, in line with Wall Street’s estimates.
(Reporting by Prerna Bedi in Bengaluru and Emma Rumney in London; Editing by Leroy Leo)
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