May 24, 2019
Latest News
European Union

Investors suffer a smoking relapse

New York (USA), Apr 16 (efe-epa).- Much like die-hard smokers, investors are finding it hard to stay away from cigarettes, according to a Dow Jones Newswires report made available to EFE on Tuesday.

The lure of tobacco stocks is an income fix, but none of the big risks have really gone away.

The S&P 500 tobacco index has gained more than a fifth since the beginning of the year, outperforming the wider United States benchmark.

After a terrible 2018, shareholders in Altria, which sells Marlboro in the US, and Philip Morris International, which sells the same brand elsewhere, have been soothed by recent developments.

One was the resignation of the head of the Food and Drug Administration, Scott Gottlieb. His aggressive approach to tobacco regulation, pushing for a ban on menthol cigarettes and measures to curb e-cigarette use among US high-school students, spooked the industry in 2018. Executives and investors are hoping his departure will mean a less hawkish FDA.

But even as the prospect hhof a US menthol ban fades into the background, the risk of a crackdown on vaping is actually growing.

The FDA just launched an investigation into a possible link between e-cigarettes and seizures, while San Francisco wants to ban e-cigarettes altogether until health impacts are properly understood. Internationally, regulators in Hong Kong and India are reluctant to approve vaping products that are attracting young users.

That is particularly ominous for Altria, which took a $13 billion minority stake in San Francisco-based JUUL Labs late last year, but London-listed British American Tobacco has also invested big sums in e-cigarettes.

Anything that slows their growth makes it harder for tobacco companies to offset the long-term decline of their traditional product.

Investors may also have grown more bullish following guidance from tobacco giants that vaping won't cannibalize traditional cigarettes as much as feared.

Altria believes cigarette volumes will decline at an annual rate of 4-5 percent over the next five years - in line with trends since 2007. But not everyone agrees with the rosy outlook: Analysts at Cowen estimate that by 2025, cigarette volume could drop by double what the Marlboro maker has projected.

The perennial appeal of big tobacco is its cash generation, which funds big dividends. Following last year's selloff, yields stand at roughly 6 percent.

But companies will struggle to increase the payout at the rate they used to as they invest heavily in alternatives to traditional smoking, including heat-not-burn tobacco products as well as e-cigarettes.

The cigarette business has weathered difficult times before, but its future now looks particularly uncertain. Investors should look for ways to wean themselves off those big dividends.

By Carol Ryan


News history
Hamilton quickest at Monaco as F1 remembers Lauda at free practice sessions

Monaco, May 23 (efe-epa).- Defending world champion Lewis Hamilton set the fastest time around the street circuit of Monte Carlo's capital during both the...

FAA's acting chief won't predict when Boeing 737 MAX will return to flight

By Andy Pasztor

Holland heads into European elections with 2 far-right parties in the running

By Imane Rachidi

India's antitrust watchdog surveys e-commerce firms including Amazon, Walmart

New Delhi, May 22 (efe-epa).- India's antitrust watchdog is assessing the domestic e-commerce sector, a step that could have consequences for

Ryanair: This year's profit to be dented by Boeing 737 MAX grounding

By Robert Wall

5 countries to watch out for in the run-up to European Parliament elections

By Lara Malvesi

Uber's stock tumbles further

By Maureen Farrell, Corrie Driebusch and Justin Baer

Saudi oil tankers attacked before entering Persian Gulf

Dubai, May 13 (efe-epa).- Two Saudi Arabian oil tankers suffered significant damage in an attack over the weekend near the Strait of Hormuz, the kingdom's...

Report: Co-founder backs Facebook breakup

New York (USA), May 10 (efe-epa).- Chris Hughes, who helped Mark Zuckerberg create the company that eventually became Facebook, is calling for the...

Uber is the largest new US listing since 2014, valuation at $82 billion

By Corrie Driebusch and Maureen Farrell

Barcelona's 4-0 loss at Liverpool poses serious questions

Barcelona, May 8 (efe-epa).- Barcelona’s stinging 4-0 defeat at Liverpool’s Anfield stadium has ended the Catalan powerhouse’s dream of another Champions...

Hackers steal more than $40 million of Bitcoin from cryptocurrency exchange

Shanghai (China), May 8 (efe-epa).- Binance, one of the world's largest cryptocurrency exchanges, said hackers stole more than $40 million worth of bitcoin...

Stocks continue to fall as uncertainty over trade talks persists

New York (USA), May 8 (efe-epa).- Global stocks continued to tumble on Wednesday as a familiar worry threatens to end the unwavering rally that has defined...

Facebook's opportunity in groups

By Laura Forman

Shares of pork producer WH Group pounded

By Steven Russolillo and Lucy Craymer

Bombardier consolidated aviation units, to divest from N. Ireland, Morocco

Montreal, Canada, May 2 (efe-epa).- Aircraft and railway train manufacturing company Bombardier Inc. said it would consolidate its aerospace assets into a...

France set to introduce safety measures to protect heritage after Notre-Dame

Paris, May 2 (efe-epa).- France looks set to reinforce security measures at its cathedrals and other national monuments when repair and refurbishment works...

Puzzle: Why certain safety features on Boeing 737 MAX jets were turned off

By Andy Pasztor

Bottas wary of Azerbaijan F1 circuit's unpredictability, Raikkonen loses P8

Baku, Apr 28 (efe-epa).- Mercedes driver Valtteri Bottas, who best took advantage of the conditions while qualifying for the Azerbaijan Formula One Grand...

Ferrari fastest in Azerbaijan F1 GP practice, Leclerc leading teammate Vettel

Baku, Apr 27 (efe-epa).- The final practice session before the season’s fourth Formula One Grand Prix race in Azerbaijan was dominated on Saturday by...

UK's opposition leader, Speaker to snub President Trump with dinner refusals

London, Apr 27 (efe-epa).- The leader of the United Kingdom’s opposition party and the speaker of parliament have both said they will snub the president of...

Azerbaijan GP marred as Williams hits drain cover, Ferrari's Leclerc fastest

Baku, Apr 26 (efe-epa).- Practice ahead of Formula One's fourth race of the season in Azerbaijan was marred by a manhole cover from street drains that came...

Lyra McKee funeral in Belfast

Dublin, Apr 25 (efe-epa).- A United Kingdom-based crime-fighting charity has on Thursday offered a reward of 10,000 pounds ($12,900) to anyone who provides...

Ex-Barcelona president Rosell absolved as money laundering case collapses

Madrid, Apr 24 (efe-epa).- Spain’s National Court has Wednesday cleared the former Barcelona soccer club president Sandro Rosell of money laundering after...

I agree Welcome to We use cookies to improve your online experience. Find out more.