Altria said it will also cease a variety of services it provides Juul beginning in April. File Photo by
Sarahj1/Pixabay/UPI
Jan. 30 (UPI) -- Shares of U.S. tobacco giant Altria tumbled on Wall Street Thursday after the tobacco giant released a fourth-quarter earnings report that showed it took a $4.1 billion hit due to its investment in e-cigarette maker Juul, which is under legal fire amid a rise in vaping among teens.
The substantial charge aided a $1.8 billion loss for Altria, the parent company of cigarette maker Phillip Morris USA, over the final quarter of 2019. Altria said the charge is directly related to the rise in legal cases against Juul and an expectation those cases, which blame the company for a rise in teenage use, will grow.
Altria acquired a 35 percent stake in Juul with a $12.8 billion investment a little over a year ago, at the time seeking to expand into the electronic cigarette market amid falling sales and declining demand for traditional smokes.
"Despite the unexpected challenges related to our investment in Juul, which led to impairment charges and reported losses, we made significant progress advancing and building our noncombustible business platform," the company said in a statement. "We enter 2020 with continued focus on harm reduction."
Altria also said it's revised the investment agreement with Juul, under which it will discontinue providing regulatory services to the e-cigarette maker beginning in April.
Concerns have also mounted in recent months about illnesses involving vaping, which have killed at least 60 people in the United States.
The U.S. Food and Drug Administration this month ordered e-cigarette companies to cease the manufacture, distribution and sale of flavored cartridge-based products within 30 days, including mint and fruit flavors critics say appeal to underage users. Sales to those under the smoking age was banned in December by the Trump administration after the National Institutes of Health reported 14 percent of high school seniors said they vaped marijuana.
New York Attorney General Letitia James filed a lawsuit against Juul last fall accusing it of deceptive business practices and illegal sales to minors.
Following Altria's report Thursday, shares fell by as much as 7 percent in early trading on the New York Stock Exchange.
