Altria's Revenue Falls as Cigarette Shipments Decline
27 July 2016 - 10:29PM
Dow Jones News
By Austen Hufford
Altria Group Inc. on Wednesday reported that revenue fell as the
tobacco company saw its cigarette shipments decline, but profit
increased and the company raised its guidance for the year.
Altria also said Wednesday that it expects higher proceeds based
on Anheuser-Busch InBev NV's revised offer for SABMiller PLC.
Altria owns a 27% stake in SABMiller.
Earnings beat expectations by a penny per share. Altria raised
its earnings outlook for the year, saying it now expects adjusted
earnings per share of $3.01 to $3.07, up from its previous guidance
of $3 to $3.05 a share.
Still, cigarette-shipment volume fell 5% because of overall
industry decline and trade inventory movements.
Altria's cigarette market share was flat at 51.4%, as a 0.1%
decrease in Marlboro retail share and a 0.1% in other premium
cigarette sales were offset by an increase in its discount brands.
For cigars, Altria's market share fell to 26.7% from 27.8%.
The U.S.'s largest tobacco company is facing stronger
competition from No. 2 player Reynolds American Inc., which last
June closed a $25 billion acquisition of rival Lorillard Inc.
Reynolds American said Tuesday that revenue climbed 33% in its
latest quarter as it continues to benefit from the Lorillard
acquisition.
Also on Tuesday, Anheuser-Busch raised its offer for its
proposed $100 billion-plus beer merger with SABMiller in an attempt
to assuage concerns over the valuation of the deal after the
British pound's steep descent.
Altria, which said it is choosing to take in the deal in the
form of a cash-and-share offer, said Wednesday that it now expects
to receive about $3 billion in cash, up from $2.5 billion
previously. It also expects to have a 10.5% ownership stake in the
combined beer giant.
That level of ownership is key because it would allow Altria to
continue to record income from the beer business through equity
accounting practices, which contributes to its bottom line.
Altria's earnings rose to $1.65 billion, or 84 cents a share,
from $1.45 billion, or 74 cents a share, a year prior. Excluding
costs related to the SABMiller offer and other items, per-share
earnings were 81 cents. Analysts polled by Thomson Reuters had
forecast earnings of 80 cents.
Net revenue after excise taxes was $4.23 billion, up from $4.28
billion previously.
Write to Austen Hufford at austen.hufford@wsj.com
(END) Dow Jones Newswires
July 27, 2016 08:14 ET (12:14 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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