Smokeless Tobacco Gives Boost To Altria

Source from:  Financial Times 08/01/2017

Altria, the largest tobacco company in the US, reported a 20 per cent increase in net earnings on Wednesday as growth in its smokeless products continued to take off while higher Marlboro cigarette prices also padded profits.

Net income rose to $1.99bn, or $1.03 per share, compared to $1.65bn, or 84 cents per share in the period the prior year.  Revenue also increased 2.2 per cent to $6.7bn.

Both metrics were ahead of analyst expectations of 87 cents per share and sales of $5.02bn.

Altria said its MarkTen e-vapor product was now the number two brand nationally, representing 13 per cent of the retail market share. It also reiterated plans to sell Philip Morris International’s modified-risk tobacco product IQOS, pending FDA approval.

The results came one day after rival Reynolds American was formally folded into British American Tobacco to create the world’s largest listed tobacco company by sales. While shares in Altria have gained 6.5 per cent in the year, BAT, in contrast, has gained 15 per cent.

Analysts have warned Altria has not embraced e-cigarettes and other alternative smoking products to the same extent as some of its peers. However efforts to expand operating margins, including the consolidations some of its manufacturing facilities, has kept the company afloat, even after a voluntary product recall last quarter of certain smokeless tobacco products.

The company also reaffirmed its 2017 full-year guidance. It continues to expect earnings per share to be in the range of $3.26 to $3.32. Enditem