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​Altria's Strategic Moves: In-Line Earnings, New Share Repurchase, and Resilience in a Changing Market

AInvestThursday, Feb 1, 2024 2:51 pm ET
1min read

Altria, a major player in the tobacco industry, recently released its earnings report, aligning with expectations and showcasing its resilience in the face of industry challenges. The fourth-quarter results revealed earnings per share (EPS) of $1.18, in line with estimates, and net revenues of $5.02 billion, meeting expectations. Looking ahead, Altria provided guidance for FY24 EPS, authorized a new $1 billion share repurchase program, and detailed its performance in 2023.

In terms of earnings, Altria reported a fourth-quarter EPS of $1.18, consistent with analyst estimates. The company's net revenues, after excise taxes, experienced a slight year-over-year decline of 1.2% to $5.02 billion, in line with the estimated $5.06 billion. Despite industry challenges, Altria demonstrated stability in its financial performance.

For FY24, Altria's EPS projections of $5.00-5.15, excluding non-recurring items, remained in line with analysts' expectations of $5.07. In addition to the earnings outlook, the company announced a new $1 billion share repurchase program, reinforcing its commitment to shareholder value. This program is expected to be completed by December 31, 2024.

Reflecting on the broader financial landscape, Altria faced a challenging 2023 with a 2.4% decrease in net revenues, reaching $24.5 billion. However, the company achieved growth in adjusted diluted EPS by 2.3%, reaching $4.95. Notably, Altria paid out $6.8 billion in dividends during the year, highlighting its dedication to shareholder returns.

Altria's diverse portfolio includes renowned tobacco brands such as Marlboro, U.S. Smokeless Tobacco, and John Middleton. Additionally, the company holds a 10% interest in Anheuser-Busch InBev and has ventured into the cannabis market with a 42% stake in Cronos and the acquisition of Njoy Holdings.

Despite industry headwinds, including regulatory pressures and evolving consumer habits, Altria's strategic moves and adaptability have allowed it to navigate challenges successfully. The company's focus on growing adjusted diluted EPS in a declining cigarette market, alongside investments in smoke-free products and strategic partnerships, underscores its resilience.

Key financial metrics from Altria's report include a reported diluted EPS decrease of 22.7% to $1.16, attributed to unfavorable tax items and special items related to its ABI investment. However, adjusted diluted EPS remained steady at $1.18, balancing lower adjusted operating company income with fewer shares outstanding and a lower adjusted tax rate.

CEO Billy Gifford acknowledged the pivotal year for Altria, emphasizing progress in enhancing the smoke-free product portfolio amidst a challenging environment. As the industry evolves away from traditional cigarettes, Altria's commitment to expanding its smoke-free product offerings, including the acquisition of NJOY and the NJOY ACE product, positions the company strategically in response to shifting consumer preferences.

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