Altria Group (MO -3.00%), a leading player in the tobacco industry, released its fourth-quarter results on Jan. 30. Adjusted earnings per share (EPS) of $1.29 slightly outperformed the analysts' consensus estimate of $1.28, while revenues (net of excise taxes) amounted to $5.11 billion, surpassing the forecasted $5.05 billion by about 1%. Overall, Altria had a solid quarter despite regulatory hurdles and competitive pressures.
| Metric | Q4 2024 | Q4 2024 Analysts' Estimate | Q4 2023 | % Change |
|---|---|---|---|---|
| Adjusted EPS | $1.29 | $1.28 | $1.18 | 9.3% |
| Revenues (net of excise taxes) | $5.11 billion | $5.05 billion | $5.02 billion | 1.6% |
| Adjusted OCI margin | 61.2% | N/A | 59.0% | 220 basis points |
| Adjusted tax rate | 24.1% | N/A | 24.6% | (50 basis points) |
Source: Analysts' estimates for the quarter provided by FactSet
Altria Group is a major player in the tobacco industry, known for its flagship Marlboro cigarette brand. Beyond its traditional cigarettes, the company has shifted its growth efforts towards smoke-free alternatives such as nicotine pouches and e-vapor products. This transition aligns with changing consumer preferences and ongoing regulatory efforts. Recent business strategies have focused on strengthening its position in emerging markets.
Despite a year-over-year decrease of 1.9% in total net revenues to $5.974 billion in Q4, the company achieved improved margins and cost efficiencies.
Sales of Altria's core smokeable products remained relatively stable, with revenues dipping by only 0.2%. This stability was managed through price hikes that offset reduced shipment volumes, bringing reported operating companies income (OCI) growth to 2.3%.
Altria's oral tobacco products saw net revenues rise by 2.7%, driven by a notable 44.4% increase in shipment volumes for on! nicotine pouches. Meanwhile, the NJOY segment displayed robust growth with a 15.3% hike in consumables' shipment volume, overcoming obstacles such as its legal battle with e-cigarette company JUUL.
Management announced a new $1 billion share repurchase program, highlighting the company’s confidence in its cash flows. Additionally, Altria maintained its commitment to regular dividends.
Altria is forecasting adjusted EPS growth of 2% to 5% for 2025, reflecting optimism tempered by the acknowledgment of regulatory and market challenges. Importantly, the company continues to increase its investments in smoke-free products.
In upcoming quarters, investors should focus on how Altria manages in its dealings with regulators, particularly with respect to safety evaluations for its NJOY product. The company's long-term prospects will greatly hinge on the effective deployment of its smoke-free strategy and its ongoing product diversification efforts.
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