Philip Morris USA said Friday it is suspending production at its Richmond, Va., manufacturing plant for at least two weeks after two employees tested positive for the virus that causes COVID-19.
Altria Group Inc., parent company of Philip Morris USA, confirmed that chairman and chief executive Howard Willard has tested positive for the virus.
Willard will take a temporary medical leave of absence, with chief financial officer William Gifford taking his place.
The manufacturer said it has enough traditional cigarette inventory, including top-selling Marlboro, for two months, although it will “continue to monitor the evolving situation.”
Piper Sandler analyst Michael Lavery said he “does not anticipate any material disruption to sales, which will continue using existing inventories.”
Separately, some domestic cigar manufacturing operations of subsidiary Middleton also will be suspended for two weeks due to COVID-19 related supply chain constraints. It projects having three months’ worth of inventory on hand.
“We take the threat of COVID-19 seriously and have been actively implementing plans to minimize business disruptions and their potential impact to our employees, consumers and customers,” Gifford said in a statement.
Both Philip Morris USA and Middleton production workers will be paid their base salary during the suspension.
“PM USA and Middleton will evaluate providing additional pay continuation beyond that timeframe as needed,” the company said.
Lavery said that when Philip Morris resumes production, it could choose to run the plant seven days a week instead of the typical five-day shift.
On Wednesday, the chief executive of British American Tobacco Plc told investors the manufacturer has experienced limited impact from COVID-19.
“We are fortunate that our business is resilient and is supported by a geographically diversified supply chain from both a manufacturing and distribution standpoint,” Jack Bowles said.
There has been analyst speculation that BAT, in particularly Reynolds American Inc.’s 2 million-square-foot manufacturing plant in Tobaccoville, might face a production slowdown in response to the coronavirus.
That’s whether from a sanitizing standpoint from making traditional and electronic cigarettes consumed by use in the mouth, or from a sharp decline in demand as millions of Americans lose their jobs temporarily or permanently, or face reduced wages.
However, with the recent decline in gasoline prices in most of the U.S., analysts say smokers may have extra money to pay for their habit.
Cowen & Co. analyst Vivian Azer said that “as it relates to cigarettes in particular, the retail channel should be more insulated, even in the event of a prolonged impact from COVID-19, as both the grocery and convenience and gas station channels will remain open.”
“There is the potential for tobacco outlet stores that don’t sell food or provide a service to shutter temporarily, which would partially impact sales.”