Altria Group Inc topped quarterly sales expectations as shoppers stocked up cigarettes ahead of COVID-19 lockdowns and the Marlboro maker said it would continue paying dividend.
The company, however, pulled its profit forecast for 2020 and beyond, saying it was unable to estimate the impact of the health crisis on its business.
Movement restrictions by governments have not hampered sales as most of the retail stores in which Altria sells its products were deemed to be essential businesses and remained open, the company said.
Volume sales of smokeable tobacco rose 6.2%, while those of smokeless tobacco, such as snus and nicotine pouches, rose 2.8% in the three months ending March.
Still, the maker of smokeless tobacco and marketer of iQOS heat-not-burn cigarettes pulled its adjusted earnings per share (EPS) view of $4.39 to $4.51 per share in 2020 and 4% to 7% long-term growth.
It maintained its prior forecast of domestic cigarette industry consumption rates declining between 4% and 6%.
In the months ahead, the company said it expects consumers to buy cheaper cigarettes as well as moist smokeless tobacco in the face of unemployment and weak consumer confidence due to the coronavirus pandemic.
The company's results come two weeks after it replaced Chief Executive Officer Howard Willard, partly due to his failed bet on e-cigarette maker Juul.
Company veteran Billy Gifford took over as the CEO but not before Altria wrote down the value of its $12.8 billion investment in Juul by about $8.6 billion due to bans on selling various forms of e-cigarettes in the United States.
"Our objective continues to be a dividend payout ratio target of approximately 80%," Gifford said in his first comments since taking over as CEO, adding that for 2020, Altria would recommend a quarterly dividend rate based on its cash position.
To shore up cash, the company's board also rescinded its $1 billion share buyback program that had $500 million remaining.
Revenue, net of excise taxes, rose 15% to $5.05 billion, beating the average estimate of $4.61 billion.
Adjusted EPS came in at $1.09, above the 98 cents per share estimate.