Altria Group Inc Earnings - Q4 2025 Analysis & Highlights
Altria Group Inc.'s Q4 2025 earnings call highlighted strong financial performance, growth in its smoke-free portfolio, and significant cash returns to shareholders, alongside discussions on industry trends, competitive dynamics, and future financial guidance.
Key Financial Results
For the full year, Altria grew adjusted diluted earnings per share by 4.4%.
The Smokeable Products segment delivered over $11 billion in adjusted OCI for the full year.
The Smokeable Products segment expanded adjusted OCI margins by 1.8 percentage points to 63.4% for the full year.
For the fourth quarter, adjusted OCI declined by 2.4%.
Adjusted OCI margins contracted by 0.8 percentage points to 60.4% in the fourth quarter.
Oral tobacco products segment adjusted OCI declined by 4.6% for the fourth quarter.
Oral tobacco products segment-adjusted OCI margins contracted by 5 percentage points to 64.5% over the same period.
For the full year, oral tobacco products segment adjusted OCI increased by 1.3%.
Oral tobacco products segment adjusted OCI margins expanded modestly by 0.1 percentage points to 67.9% for the full year.
Altria recorded non-cash impairment charges of $1.3 billion related to e-vapor definite lived intangible assets and goodwill in the fourth quarter.
Altria recorded $161 million of adjusted equity earnings from ABI in the fourth quarter, up 1.3% versus the prior year.
Business Segment Results
Smokeable Products segment domestic cigarette volumes declined by 7.9% in the fourth quarter and 10% for the full year.
Adjusted for calendar differences and trade inventory movements, domestic cigarette volumes declined by 7% in the fourth quarter and 9.5% for the full year.
Middleton reported shipment volume increased 4.2% for the fourth quarter and 1.8% for the full year in cigars.
Total oral tobacco products segment-reported shipment volume decreased 6.3% for the fourth quarter and 5.5% for the full year.
Growth in on! was more than offset by lower MST volumes.
Adjusted for trade inventory movements and calendar differences, fourth quarter and full year oral tobacco products segment volumes declined by 6% and 4.5%, respectively.
Oral tobacco products segment retail share was 29.6% for the fourth quarter and 31.9% for the full year.
Capital Allocation
Altria returned $8 billion to shareholders through dividends and share repurchases combined for the full year.
Altria paid $7 billion in dividends in 2025.
The board raised the dividend by 3.9% in August, marking the 60th increase in the last 56 years.
Altria repurchased more than 17 million shares for $1 billion under its $2 billion share repurchase program.
$1 billion remained under the current share repurchase program at the end of the fourth quarter, which expires at the end of 2026.
The total debt-to-EBITDA ratio as of December 31 was 2 times, in line with the target.
The primary driver of the increase in CapEx is the early investments for the import/export business.
The return on investment for the import/export is very strong, with a payback of less than a year.
Industry Trends and Dynamics
The estimated number of adult consumers in the e-vapor and oral tobacco categories grew to almost 30 million over the past year.
Total nicotine industry equalized volumes increased for the third consecutive year and grew by approximately 2% over the past five years on a compounded annual basis.
Smoke-free alternatives represented more than 50% of the total nicotine space, up 5 percentage points from the prior year.
The primary driver of industry and smoke-free growth continues to be the widespread availability of illicit flavored disposable e-vapor products.
The e-vapor category grew approximately 15% in 2025.
Illicit products represented approximately 70% of the e-vapor category.
At year-end, there were more than 20 million vapers, with nearly 15 million using disposable products.
Disposable e-vapor volumes grew approximately 30% in 2025, compared to over 50% in 2024.
Growth in the number of disposable vapers slowed, rising approximately 10% in 2025 versus over 40% in 2024.
Nicotine pouches continue to drive overall oral tobacco volume growth, which increased an estimated 14% over the past six months.
In the fourth quarter, oral nicotine pouches grew 10.4 share points versus the prior year and now represent nearly 57% of the total oral category.
Competitor promotional activity remained elevated during the fourth quarter.
Average retail prices for category competitors in the fourth quarter declined 3% sequentially and 12% year-over-year.
Innovation in pouch formats, including wet pouches, broader flavor variety, and higher nicotine strength offerings, is driving nicotine pouch growth.
Cross-category impacts, primarily driven by illicit flavored disposable e-vapor, contributed approximately 2% to 3% to the cigarette industry decline over the past 12 months.
The discount cigarette segment was most affected by the change in cross-category impact.
For the fourth quarter and full year, discount retail share grew by 2.6 share points and 2.2 share points, respectively.
Competitive Landscape
Helix remained focused on balancing profitability with retaining loyal on! consumers.
At retail, on!'s price increased by approximately 4% sequentially and 3% versus the prior year.
on!'s retail share of the total oral tobacco category was 7.7% for the fourth quarter and 8.2% for the full year.
Marlboro retail share declined 1.5 share points in the fourth quarter and 1.2 share points for the full year.
In the premium segment, Marlboro's share of premium decreased 0.1 share point to 59.2% in the fourth quarter.
For the full year, Marlboro's share grew to 59.4%, up 0.1 share point versus the prior year.
Basic continued to capture share in the discount segment.
In the fourth quarter, Basic retail share grew by 0.6 share points sequentially and 1.9 share points year-over-year.
Basic's strong performance demonstrates PM USA's ability to deploy advanced RGM capabilities to effectively compete in price-sensitive stores while minimizing incremental impact to Marlboro.
Middleton continued to outperform in the large mass cigar industry.
Macroeconomic Environment
Persistent discretionary income pressures remain the primary driver of growth in the discount segment.
The consumer has been under severe economic pressures due to cumulative inflation.
Growth Opportunities and Strategies
Altria achieved meaningful milestones that advance its smoke-free portfolio and position it for sustained success in the US nicotine space and for long-term adjacent growth.
In 2025, Helix received marketing-granted orders from the FDA for certain on! PLUS products.
Horizon submitted a combined PMTA and MRTPA to the FDA for Ploom and Marlboro heated tobacco sticks.
Altria entered into a strategic collaboration with KT&G to advance international Modern Oral, US non-nicotine growth, and traditional tobacco operating efficiencies.
Altria continues to advocate for a responsible and well-regulated marketplace.
Altria has long advocated for stronger enforcement against illicit products and an acceleration of FDA market authorizations for smoke-free products.
In 2025, there was increased engagement and action from federal agencies and government officials, including fourth-quarter legislation requiring the FDA to allocate at least $200 million of tobacco user fees to enforcement activities.
Early signs suggest that these efforts, together with tariffs of Chinese manufactured goods, are beginning to impact the illicit marketplace.
The FDA's pilot program to streamline PMTA reviews for certain oral nicotine pouches could be a meaningful step toward improved regulatory speed and clarity.
Altria intends to maintain a measured approach to investments in e-vapor until the regulatory framework is functioning as intended and enforcement actions meaningfully address the illicit market.
Helix successfully delivered against its plans and contributed profitable growth to the oral tobacco product segment for the full year.
Helix grew on! reported shipment volume by approximately 11% to more than 177 million cans for the full year.
In December, the FDA authorized on! PLUS mint, wintergreen, and tobacco in 6-milligram and 9-milligram nicotine strengths.
Following authorization, Helix resumed shipments of on! PLUS in Florida, North Carolina, and Texas.
on! PLUS is a premium, differentiated product that is well-positioned to meaningfully participate in nicotine pouch growth.
Early consumer feedback indicates that on! PLUS's innovative pouch material with smooth flavor proposition is a competitive advantage.
In recent research, on! PLUS mint achieved higher overall purchase intention scores than the leading nicotine pouch brand and distinguished itself with superior pouch comfort and mouthfeel.
In the fourth quarter, Helix began laying the foundation to expand on! PLUS nationally.
Helix plans to focus on generating trial for on! PLUS and retaining adopters for on! Classic in 2026.
Helix's strategy remains focused on innovation and responsibly delivering on consumer preferences.
In November, Helix submitted PMTA applications for on! PLUS products in six additional flavor varieties across three nicotine strengths.
Altria's international smoke-free efforts focus on the fast-growing nicotine pouch category.
In 2025, on!, on! PLUS, and the newly added FUMi brand competed across select international markets through e-commerce and targeted retail distribution.
FUMi appeals to 80% of consumers interested in slim, well-pouched products.
FUMi's early performance has been encouraging, supporting expansion to 40,000 retail locations in seven markets.
Three new line extensions were added to FUMi, bringing the brand to 12 unique flavor offerings.
Altria's broadened nicotine pouch portfolio has accelerated international expansion and is generating valuable consumer insights.
Altria is making investments to build PM USA cigarette import and export capabilities.
Altria is making investments in its smoke-free portfolio to have appropriate manufacturing capability for products like on! PLUS and future pipeline products.
Altria will be national with on! PLUS through the first half of 2026.
Financial Guidance and Outlook
Altria expects to deliver 2026 full-year adjusted diluted EPS in a range of $5.56 to $5.72.
This range represents a growth rate of 2.5% to 5.5% from a $5.42 base in 2025.
Growth is expected to be weighted to the second half of the year, reflecting a progressive increase in cigarette import and export activity.
Guidance contemplates planned investments to support contract manufacturing capabilities.
Guidance includes limited impact on combustible and e-vapor product volumes from illicit enforcement efforts.
Guidance assumes NJOY ACE not returning to the marketplace in 2026.
Planned investment areas include marketplace activities in support of smoke-free products and continued smoke-free product research, development, and regulatory preparations.
Helix anticipates continuing to be profitable for the full year 2026.
