Tobacco, like alcohol, is considered a recession-resistant sector, and the first-quarter earnings report of Marlboro owner Altria (NYSE:MO) underscores why.

The cigarette giant reported revenue surged 16%, after removing the contribution from excise taxes, as domestic shipping volumes of smokeable products jumped more than 6% from the year-ago period. 

While price increases helped boost revenue, Altria said "consumer pantry loading due to COVID-19" were a contributing factor to the gains. As smokers were unsure whether they'd be able to continue buying cigarettes, they loaded up before everything was locked down.

Man lighting a cigarette

Image source: Getty Images.

Smoking the competition

Net revenue rose to $5.6 billion, but consumers also traded down to cheaper brands, which resulted in its leading Marlboro brand losing 0.5 points of share across all cigarettes, which now stands at 42.8%, and maintaining its share of 56.9% in the premium cigarette category. Altria expects that trend to continue.

Though the impact of the coronavirus pandemic on Altria was negligible in the quarter, the company has withdrawn its full-year forecasts. Philip Morris International (NYSE:PM) did the same thing several weeks ago, though its own global cigarette sales were largely immune to the ravages of the COVID-19 outbreak.

Altria did, however, maintain its prior forecast that the domestic cigarette industry would continue to slump, with consumption rates falling between 4% and 6%.

Unlike other companies that have cut their dividends, the cigarette giant maintained its payout. Altria said it expects its dividend payout ratio to stay at its target of approximately 80% of adjusted EPS, meaning its quarterly dividend rate for 2020 will reflect "its strong cash generation and the strength of its balance sheet."

Altria is still under pressure for its investments in leading electronic cigarette maker Juul Labs and marijuana producer Cronos (NASDAQ:CRON), recording related pre-tax charges of $159 million.