Altria Group (MO 0.14%), the titan behind Marlboro in the tobacco industry, released first-quarter results on April 25. Against analysts' expectations, Altria reported an adjusted diluted EPS of $1.15, aligning with the estimate but signaling a slight contraction by 2.5% year-over-year. Revenue net of excise taxes exceeded expectations slightly at $4.717 billion, indicative of Altria's resilient business model amid shifting industry dynamics. Net revenue for the quarter came in at $5.576 billion, a 2.5% year-over-year drop, primarily due to a drop in revenue from smokeable products. The quarter reflected both challenges and strategic pivots.
| Metric | Q1 2024 | Analyst Estimate | Q1 2023 | % Change (YOY) |
|---|---|---|---|---|
| Revenue net of excise taxes | $4.717 billion | $4.712 billion | $4.763 billion | (0.9%) |
| Adjusted diluted earnings per share (EPS) | $1.15 | $1.15 | $1.18 | (2.5%) |
Inside Altria's business strategy
Altria Group is renowned for its dominant presence in the tobacco industry, notably with its flagship brand, Marlboro. However, facing the inevitabilities of a market in flux, Altria has been pioneering into products like vaping products, marking a pivotal shift in its legacy business model. The company's strategic acquisitions, such as NJOY Holdings, underscore its resolve to diversify its portfolio and tap into the burgeoning demand for alternative nicotine products.
Moreover, Altria's ventures highlight its agility in navigating the tight regulatory landscape. These strategies underscore a critical phase for Altria, aiming to sustain its market leadership while transforming its product suite for future growth.
Quarterly highlights
The company reported the NJOY e-vapor products had 4.3% retail share of the U.S. multi-outlet and convenience channel, a slight increase.
The company sold shares of Anheuser-Busch InBev, taking in $2.4 billion. It retains ownership of roughly 8% of that company.
Altria authorized a $2.4 billion increase to its existing $1 billion share repurchase authorization.
Net revenue from smokeable products decreased 3.6%, thanks to lower shipment volume and higher promotional investments, though those were partially offset by higher pricing.
Cigar shipment volume decreased 6.1%
Net revenue from oral tobacco products increased 3.7%, mostly thanks to higher pricing and lower promotional investments.
Looking ahead
Altria has charted a clear direction for 2024, focusing on leveraging its diversified product portfolio for sustained growth. The company reaffirmed its 2024 full-year adjusted diluted EPS guidance for a range of $5.05 to $5.17. That would be a growth rate of 2% to 4.5%. The company noted that it "expect[s] 2024 adjusted diluted EPS growth to be weighted to the second half of the year. Our guidance includes the impact of two additional shipping days in 2024 and assumes limited impact on combustible and e-vapor volumes from enforcement efforts in the illicit e-vapor market."
Investors should closely monitor Altria's progress in expanding its reduced-risk portfolio and navigating the regulatory environment. These factors, combined with its strategic acquisitions and innovation in product development, will be crucial in determining Altria's ability to maintain its market leadership and financial health in the evolving tobacco and nicotine industry.
