Altria Group Inc (MO, Financial), a leading player in the tobacco industry, has reported its financial results for the second quarter and first half of 2024. The company, which includes subsidiaries such as Philip Morris USA, US Smokeless Tobacco, John Middleton, Horizon Innovations, and Helix Innovations, continues to dominate the U.S. market in cigarettes and smokeless tobacco. Altria also holds significant stakes in Anheuser-Busch InBev and Cronos Group, and recently acquired Njoy Holdings.
Performance Overview
Altria Group Inc (MO, Financial) reported net revenues of $6.2 billion for Q2 2024, a 4.6% decline compared to Q2 2023. Revenues net of excise taxes also fell by 3.0% to $5.3 billion. Despite these declines, the company managed to achieve a reported diluted EPS of $2.21, an 85.7% increase from the previous year, primarily driven by gains from the sale of IQOS Tobacco Heating System commercialization rights and fewer shares outstanding.
However, adjusted diluted EPS remained flat at $1.31, aligning closely with analyst estimates of $1.31. For the first half of 2024, net revenues decreased by 3.6% to $11.8 billion, while revenues net of excise taxes dropped by 2.0% to $10.0 billion. Reported diluted EPS for the first half increased by 56.4% to $3.41, while adjusted diluted EPS decreased by 1.6% to $2.46.
Key Financial Metrics
| Metric | Q2 2024 | Change vs. Q2 2023 | First Half 2024 | Change vs. First Half 2023 |
|---|---|---|---|---|
| Net Revenues | $6,209 million | (4.6)% | $11,785 million | (3.6)% |
| Revenues Net of Excise Taxes | $5,277 million | (3.0)% | $9,994 million | (2.0)% |
| Reported Diluted EPS | $2.21 | 85.7% | $3.41 | 56.4% |
| Adjusted Diluted EPS | $1.31 | 0.0% | $2.46 | (1.6)% |
Challenges and Achievements
Altria's traditional tobacco businesses faced a challenging operating environment, with a notable decline in shipment volumes. The smokeable products segment saw a 13.0% decrease in domestic cigarette shipment volume for Q2 2024, primarily due to macroeconomic pressures and the growth of illicit e-vapor products. Despite these challenges, the company's smoke-free product portfolio showed promising growth. NJOY consumables reported a 14.7% sequential increase in shipment volume, and NJOY devices saw an 80.0% sequential increase.
Altria also achieved significant milestones in its smoke-free product segment. NJOY received the first and only marketing granted orders from the FDA for menthol e-vapor products, and the company submitted PMTA applications for next-generation NJOY and on! products. These developments are crucial as Altria aims to transition adult smokers to a smoke-free future.
Cash Returns and Shareholder Value
Altria continued to return significant value to shareholders, delivering more than $5.8 billion through share repurchases and dividends in the first half of 2024. The company completed a $2.4 billion accelerated share repurchase program, repurchasing 53.9 million shares at an average price of $44.50. As of June 30, 2024, Altria had $990 million remaining under its authorized $3.4 billion share repurchase program, expected to be completed by the end of the year.
Dividends paid amounted to $1.7 billion in Q2 2024 and $3.4 billion for the first half of the year. Future dividend payments remain subject to the discretion of the Board of Directors.
Outlook and Guidance
Altria has narrowed its full-year 2024 guidance for adjusted diluted EPS to a range of $5.07 to $5.15, representing a growth rate of 2.5% to 4.0% from a base of $4.95 in 2023. The company expects adjusted diluted EPS growth to be weighted towards the second half of the year, considering the impact of two additional shipping days in 2024 and limited impact from enforcement efforts in the illicit e-vapor market.
Altria's management remains cautious, acknowledging the dynamic external environment, including economic conditions, adult tobacco consumer dynamics, and regulatory developments. The company continues to invest in its vision of transitioning adult smokers to a smoke-free future, focusing on marketplace activities and product research and development.
"Altria’s momentum continues to build as we pursue our Vision to responsibly lead the transition of adult smokers to a smoke-free future," said Billy Gifford, Altria’s Chief Executive Officer. "In the second quarter, our companies’ innovative smoke-free products delivered strong share and volume performance, and we hit meaningful milestones that we believe set us up for future success."
For more detailed information, readers can access the full 8-K filing.
Explore the complete 8-K earnings release (here) from Altria Group Inc for further details.
