Altria Bets on Export Tax Rebate to Boost Profits Amid Industry Decline
Altria Group, Inc. (NYSE: MO), the U.S. tobacco giant behind Marlboro, is projecting a profit lift in the latter half of the year, banking on a long-overlooked federal tax provision to counterbalance declining domestic cigarette sales. The company confirmed the strategy following its fourth-quarter earnings report, which fell slightly short of analyst estimates.
The key to this anticipated improvement lies in the "double duty drawback," a tax mechanism that allows tobacco companies to reclaim federal excise taxes paid on domestic cigarette sales when they export similar products. For years, Altria derived little benefit from this rule, as its business has been almost entirely focused on the U.S. market, unlike multinational rivals such as British American Tobacco.
That is now changing. Through partnerships with international firms like South Korea's KT&G, Altria is ramping up cigarette exports via contract manufacturing agreements. "It would be a competitive disadvantage not to pursue this," incoming CEO Salvatore Mancuso told Reuters. The move is part of a broader pivot as the company grapples with a persistent drop in traditional tobacco volume, seeking growth from its On! nicotine pouches and other smoke-free products in a fiercely competitive landscape.
For the full 2026 fiscal year, Altria maintains an adjusted earnings forecast of $5.56 to $5.72 per share, with the midpoint above the current Wall Street consensus. The company remains a staple for income-focused investors, often highlighted for its high-yield, sustainable dividend.
Market Reaction & Analyst Views:
The announcement has drawn mixed reactions from industry observers. "This is a smart, albeit late, operational efficiency play," commented David Chen, a portfolio manager at Horizon Capital. "It doesn't change the fundamental challenges of the sector, but it unlocks value from their existing volume and improves cash flow to support the dividend."
A more critical take came from Sarah Miller, an advocate with the Consumer Health Watchdog. "It's cynical financial engineering," she said sharply. "They're exploiting a tax loophole to subsidize the global spread of an addictive, lethal product while communities bear the healthcare costs. It underscores the moral bankruptcy of profiting from smoking's decline."
Meanwhile, Michael Rodriguez, a retail investor and long-time shareholder, offered a pragmatic view: "As an investor, I welcome any legitimate strategy to sustain the dividend. The export rebate is a low-hanging fruit. The real test is whether their reduced-risk products can gain meaningful traction."