The cigarette giant beat expectations for the fourth quarter by a slender margin, but saw growth in its smoke-free product segments.
Altria Group (MO -2.98%), 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
Overview of Altria Group’s Business
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.
Quarter Highlights and Financial Performance
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.
Looking Ahead
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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