Boston, MA 04/29/2014 (wallstreetpr) – Altria Group Inc (NYSE:MO) reported positive results in the first quarter ended March 31, 2014, and revised the full year (2014) guidance for adjusted diluted EPS. The leading premium brands continue to provide solid growth for its core tobacco business.
Core business (smokeable products) continue to drive
Altria Group Inc (NYSE:MO)’s net revenue remained unchanged despite a solid growth in smokeable and smokeless products. It was due to lower gains from sales of assets to Philip Morris Capital Corporation (PMCC). The increasing sale of smokeable and smokeless products improved the Company’s operating income and expanded its margin.
The smokeable products represent ~90% of total revenue with premium category of cigarettes including Marlboro. The segment revenue remained unchanged due to lower shipment volumes, however; high pricing improved the adjusted OCI (operating companies income) to $1.5 billion (+6.4%) and adjusted OCI margin to 44.1% (+ 2.2 percentage points). Similarly, smokeless products’ net revenues increased by 5.8% due to higher pricing and higher volumes that increase the segment OCI to $239 million (+7.7%) and adjusted OCI margin to 62.1% (+1.1pp).
Altria’s net income has improved due to higher OCI in smokeable and smokeless products segments along with lower interest and other debt expenses. Adjusted EPS grew by 5.6% to $0.57 that offset lower gains from PMCC and lower earnings from SABMiller.
Innovative products sustain further growth
Altria Group Inc (NYSE:MO) continues to invest in innovative products to increase net income. Altria’s subsidiary Nu Mark has acquired e-vapor business of Green Smoke to enhance Nu Mark’s supply chain capabilities and products offerings. In June, Nu Mark will launch its new product MarkTen e-cigarettes that may provide a different experience to its customers.
Final take
Altria continues to improve shareholder’s return and expects to maintain dividend payout ratio of ~80% of adjusted diluted EPS. The increasing segment OCI for smokeable products will further drive the Company’s operating earnings.
Altria Group Inc (NYSE:MO) revised its full year earnings’ guidance while considering high segment OCI and the effect of certain special items such as non-participating manufacture (NPM) adjustments and expects 6-9% year over year growth in adjusted diluted EPS to $2.52 to $2.59 in FY2014.
