Altria Group (NYSE:MO) has continually found ways to keep its profits moving higher despite having to overcome a host of obstacles along the way. Yet the secular decline in smoking always has an impact on Altria's results, and efforts to offset those declines with other strategic moves meet with mixed success over time.

Coming into Tuesday's first-quarter financial report, Altria investors were hoping that the company would once again find ways to produce at least modest growth going forward. Altria's results weren't quite as strong as many investors had hoped to see, but the tobacco giant is still confident in its ability to keep up its growth rates for the full year. Let's look more closely at Altria to see how it did and what lies ahead for the company.

Altria companies.

Image source: Altria.

Altria keeps finding ways to profit

Altria's first-quarter results didn't live up to everyone's hopes for the tobacco giant. Revenue net of excise taxes climbed 1.3% to $4.59 billion, but that was less than the consensus forecast among those following the stock for $4.64 billion in sales. Net income grew at a healthier 15% rate to $1.40 billion, and that resulted in adjusted earnings of $0.73 per share, which was $0.01 less than most investors had expected to see.

As we've seen in past quarters, the smokeable products segment of Altria's business had the biggest impact on its overall numbers. Revenue climbed nearly 2% for the segment when you exclude excise taxes, and adjusted operating company income climbed at an 8% pace. Those numbers aren't ideal, but given that cigarette shipment volumes were down 2.7% for the quarter, Altria's ability to keep its bottom line growing was even more impressive.

For the most part, the cigarette business held its own in a tough industry environment. The key Marlboro brand did lose some market share, falling 0.2 percentage points to 43.6%, and that helped bring Altria's overall retail market share down to 51%. However, shipment volume weakness spanned both the premium and discount arenas, and among smokeable products, only the Black & Mild cigar brand saw rising shipment volumes.

Of some concern was the fact that Altria's smokeless products segment posted worse performance. Revenue was down 2.5%, and adjusted operating company income fell 8% on a 5% shipment decline. The main problem for the unit was its recall of certain smokeless tobacco products at a manufacturing facility in Illinois, which cost the company $60 million in potential operating income. Nevertheless, the strength of Copenhagen continued, with market share rising to 33% despite an overall 0.7 point drop in total smokeless retail share, to 53.5%.

Even Altria's wine business took a hit. Sales were down 3%, and operating company income took a 25% haircut. Shipments were down 10%, in part because of the timing of the Easter holiday.

What's next for Altria?

CEO Marty Barrington nevertheless felt confident about the company. "Altria is off to a solid start in 2017," Barrington said, "despite some short-term headwinds." The CEO pointed to lower equity earnings from the Anheuser-Busch InBev (NYSE:BUD) investment and the smokeless recall as key issues that temporarily held back Altria's growth.

However, none of these experiences made Altria doubt its long-term financial health. The company once again repeated its call for 7.5% to 9.5% growth in adjusted earnings for the full year compared to 2016 levels, with Barrington suggesting that the growth will be clearer in the second half of the year. That works out to $3.26 to $3.32 per share.

Investors still haven't really seen the impact A-B InBev might have on Altria's eventual profit. During the quarter, Altria recorded $73 million in pre-tax special items related to A-B InBev, which stemmed largely from the beer maker's derivative losses. Those items aren't likely to last, and when they're gone, Anheuser-Busch will start being beneficial to Altria's overall results.

Altria investors initially reacted negatively to the news, but by midday, the stock was up about half a percent. Despite ongoing challenges, Altria has been equal to the task in the past, and investors hope it can do so again.

Dan Caplinger has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Anheuser-Busch InBev NV. The Motley Fool has a disclosure policy.