Restructuring charges led Altria
Shareholders weren't looking forward to hearing about reduced earnings, but on a global basis, the tobacco business continues to bustle. Wednesday, the tobacco giant reported Q2 diluted EPS that was 18.6% lower than in the year-ago quarter. This decrease is primarily because of the spinoff of Kraft
When delving into the company's second-quarter release, there were some negative trends domestically, but overall, the company appears well-positioned for the long run. The most troubling news for investors was that U.S. cigarette shipment volume was 3.3% lower than the year-ago quarter. Altria is also estimating a full-year decline of 3% to 4% in total cigarette industry volume.
Shareholders can take solace in the operating results of Altria's international tobacco business, as well as new growth initiatives. Altria's international tobacco operating income increased by 4.7% year over year, primarily because of higher prices. A key highlight was that shipment volume to Asia increased by 15.9% over the year-ago quarter, helped by acquisition activity in Pakistan. The company again noted that it's still considering a split-off of Philip Morris International to increase its valuation.
Two growth initiatives that should prove beneficial are Altria's investment in Mexico and the company possibly going into the spit-free tobacco market. On Wednesday, Altria said it would spend about $1.1 billion to increase its stake in its Mexican tobacco business joint venture to 80% from 50%. And next month, Altria plans to test-market Marlboro Snus in Texas in an effort to break into the growing smokeless tobacco market. Reynolds American
The U.S. cigarette market may be contracting, but once again, Altria has demonstrated its ability to focus on areas of revenue growth abroad and seek out new potential revenue streams. The fact that shares of British American Tobacco
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