Altria''s Smokable Products Delivered Robust 4Q15 Results

Source from:  Market Realist 02/05/2016

Smokable products segment's revenue for fiscal 4Q15

Altria Group's (MO) smokable products segment's net revenue increased 0.8% to $5.6 billion in fiscal 4Q15 compared to $5.5 billion in fiscal 4Q14. The increase was primarily driven by higher pricing, partially offset by lower shipment volume. The domestic shipment volume for PM USA, Altria's smokable tobacco subsidiary, decreased 2.6% in fiscal 4Q15, as trade inventory movement more than offset retail (XRT) share gains.

However, PM USA's retail share for Marlboro rose 0.2% to 44% for fiscal 2Q15 as well as full year 2015. That was more than peer cigarette brands such as Camel (RAI), Eagle 20 (VGR), and Lucky Strike (BTI). PM USA's total retail share grew by 0.5 points in the fourth quarter and by 0.4 points for the full year due to gains by Marlboro and L&M in Discount.

Adjusted operating income

Altria's adjusted operating income grew 10.9% for full year 2015, driven primarily by higher pricing, volume growth, and the benefit of the federal tobacco quota buyout expiration. The adjusted operating income margin also expanded to 46.4% for this segment in fiscal 4Q15.

Operating income for the smokable product segment increased 1.5%, primarily due to higher pricing, mostly offset by the following:

·higher resolution expenses

·higher selling, general, and administrative (or SG&A) expenses

·NPM Adjustment Items

·higher tobacco and health litigation items

Profitable tipped cigars

In November 2015, PM USA expanded distribution of Marlboro Midnight menthol nationally, offering adult smokers a bold menthol flavor. This could help Altria build positive momentum for its smokable product segment.

In the machine-made large cigars category, Black & Mild's retail share declined by 1.3 and 1.0 retail share points in 4Q15 and full year 2015, respectively. However, Altria continues to focus on Black & Mild's strength in a more profitable tipped cigars segment.

Altria has exposure in the iShares S&P 500 Growth ETF (IVW) with 1.1% of the total weight of the portfolio. Enditem