Vaping backlash hits Altria for $4.5bn
The backlash from the crackdown on vaping has knocked Altria for $4.5bn (£3.5bn) today, as its 35 per cent stake in e-cigarette maker Juul turned sour.
The company reported a net loss of $2.60bn, or $1.39 per share in the third quarter ended 30 September, from a profit of $1.94bn, or $1.03 per share.
Read more: Philip Morris and Altria end merger talks
Shares of the US maker of Marlboro rose 1.6 per cent to $46.70 before the bell.
The tobacco giant bought its stake in Juul for $12.8bn last December, in an attempt to make up for falling sales of traditional cigarettes.
At the time Juul’s market value was a staggering $38bn, but recent regulatory changes have led to the possibility of the company’s products being removed from the market.
Concerns over an epidemic of youth vaping was a major factor in the collapse of Altria’s merger talks with Philip Morris last month.
Altria blamed a number of reasons for the charge, including higher chances of the US Food and Drug Administration (FDA) banning flavoured vaping products, as well as outlawing the some e-cigarettes in certain cities and states.
In September President Trump took aim at the industry amid a spate of vaping related illnesses, threatening to ban flavoured products.
There was some good news for Altria as the FDA approved the iQOS cigarette heating system, which Altria holds the rights to sell in the US.
Read more: US vaping deaths hit growth at Imperial Brands
Juul has suspended advertising in the United States, hired an Altria-executive as its CEO and revamped its management in the past few weeks.
Altria also said it expects the Federal Trade Commission’s request for additional information into its Juul investment to be resolved in first-quarter of 2020.
Main image credit: Getty