Altria Group, Inc.'s Oral Tobacco Products Segment OCI Soars Over 100%

Altria Group, Inc. (NYSE: MO) reported Q2 2025 revenues net of excise taxes of $5.29 billion, marking a slight increase of 0.2% compared to Q2 2024. The company’s reported diluted EPS for the quarter was $1.41, a significant decrease of 36.2% year-over-year. This decrease was primarily due to a 2024 gain from the sale of IQOS Tobacco Heating System commercialization rights, partially offset by higher reported operating companies income (OCI) and fewer shares outstanding. Adjusted diluted EPS, however, rose 8.3% to $1.44, primarily driven by higher adjusted OCI and fewer shares outstanding. Analysts had estimated revenue at $5.189 billion and EPS at $1.37, indicating the company beat both revenue and EPS expectations for the quarter.

Operational Highlights and Segment Performance

In the second quarter, Altria's performance was driven by mixed results across its segments. The smokeable products segment experienced a 2.5% decrease in net revenues, primarily due to lower shipment volume, though partially offset by higher pricing. Revenues net of excise taxes for this segment decreased 0.4%. Reported OCI for smokeable products increased 4.4%, driven by higher pricing, lower per-unit settlement charges, and reduced costs. Adjusted OCI for smokeable products also increased 4.2%, with adjusted OCI margins improving by 2.9 percentage points to 64.5%.

Conversely, the oral tobacco products segment showed strong growth, with net revenues increasing 5.9%. This was primarily attributed to higher pricing, despite a higher percentage of on! shipment volume relative to MST and lower overall shipment volume. Reported OCI for oral tobacco products increased by over 100%, significantly boosted by the non-cash impairment of the Skoal trademark in 2024 and higher pricing. Adjusted OCI for this segment grew 10.9%, with adjusted OCI margins expanding by 3.1 percentage points to 68.7%.

Management Outlook and Strategic Focus

Altria’s CEO, Billy Gifford, highlighted the continued pursuit of the company's Vision in the second quarter, emphasizing strong and profitable core businesses. He noted that the “on!” product delivered strong performance and was a substantial driver of growth in the oral tobacco segment. The company also returned significant value to shareholders, delivering more than $4 billion through dividends and share repurchases in the first half of the year.

For the full year 2025, Altria has narrowed its guidance for adjusted diluted EPS to a range of $5.35 to $5.45, representing a growth rate of 3.0% to 5.0% from a 2024 base of $5.19. This guidance anticipates continued EPS growth, though at a moderated pace, as the company laps the lower share count from the 2024 accelerated share repurchase program and benefits from the Master Settlement Agreement legal fund expiration. The company’s outlook considers the impact of increased tariffs, assumes limited impact from illicit product enforcement on combustible and e-vapor volumes, and includes reinvestment of anticipated cost savings from the Optimize & Accelerate initiative.