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Tobacco shares drop on report Biden is planning to restrict cigarette nicotine

Tobacco stocks drop on report Biden is planning to limit cigarette nicotine

Marlboro cigarettes, a product of Philip Morris International

Daniel Acker | Bloomberg | Getty Images

Tobacco supplies fell Monday on a report that the Biden government is considering limiting nicotine levels in cigarettes.

The report, quoting people familiar with the matter, was published in the Wall Street Journal. The paper said the discussion came as officials neared a deadline to say whether or not they would like to see a menthol cigarette ban.

The Biden government is trying to determine whether to lower nicotine levels in conjunction with a menthol ban or as a separate policy, people told the Journal.

Nicotine does not cause cancer, but smoking is addicting. The goal of lowering nicotine levels would be to make cigarettes less addictive in hopes of encouraging smokers to quit other products or to switch to other products that are believed to be safer.

The Food and Drug Administration, which oversees tobacco, declined to comment on the report.

“Any action the FDA takes must be based on scientific knowledge and understanding, and consider the real consequences of such action, including the growth of an illegal market and the impact on hundreds of thousands of jobs from farms to local businesses across the country.” Altria spokesman George Parman told CNBC in an email.

Altria shares closed the report by more than 6%. In extended trading on Monday, stocks fell another 2%.

British American Tobacco shares closed 2% on Monday, while Philip Morris International shares ended the day down more than 1%. Both stocks also fell after the market closed.

Philip Morris International declined to comment on the matter. The tobacco company does not sell or market cigarettes in the United States. Even so, his stock fell on the news.

British American Tobacco did not immediately respond to a request for comment. The company owns Reynolds American, the manufacturer of camel cigarettes.

Read the full story from the Wall Street Journal here.

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Business

Altria mentioned cigarette business shipments flattened in 2020

Altria said cigarette industry shipments flattened in 2020

Marlboro cigarettes, a product of Philip Morris International

Daniel Acker | Bloomberg | Getty Images

After years of accelerating smoking decline, tobacco giant Altria announced a trend reversal as U.S. cigarette volumes remained unchanged year over year across the industry.

However, the company declined to predict how things would play out in 2021, as it is unclear whether the factors that contributed to this trend would continue.

The pandemic brought more people into their homes, giving smokers more opportunities to take a break from their hectic days and glow more often, especially given the overall higher levels of stress and anxiety due to the economy and health crisis. Employees who worked from home were no longer in a smoke-free office, and consumers generally had more disposable income from restrictions on other forms of entertainment such as restaurants and bars, movie theaters, and travel.

The trend was more pronounced in Altria’s own store. The Marlboro maker’s total cigarette shipping volume declined 0.4% from 2019 and rose 3.1% in the fourth quarter. For comparison: Altria’s cigarette volume decreased by 7.3% from 2018 to 2019.

Altria said it is paying close attention to trends that could affect future cigarette sales.

“Looking ahead, we expect the volume trends in the cigarette industry in 2021 to be driven most by home smoker practices, unemployment rates, tax incentives, cross-category movements, timing and breadth of COVID-19 use – Vaccines and consumer purchasing behavior following vaccine will be affected, “Altria said on a conference call on revenue.

With the expected decline in smoking, Altria has invested in alternatives to cigarettes such as the heated tobacco product iQos and nicotine pouches.

Altria shares closed Thursday at $ 42.65, up 1.98%. The stock is down nearly 15% over the past year for a market value of $ 79.26 billion.

For the fourth quarter, the company reported net income of $ 1.92 billion, or $ 1.03 per share, compared to a loss of $ 1.81 billion a year ago. Excluding items, Altria earned 99 cents per share, which was below analyst estimates. Revenue was better than expected, increasing to $ 6.3 billion from $ 6 billion a year ago.

For 2021, after adjustments, the company expects earnings of $ 4.49 to $ 4.62 per share.