US
Releasing its fourth-quarter results, Altria Group Inc. said it sees US cigarette sales falling even faster than it had expected, validating the company’s outsize investment in e-cigarettes.
Altria c.e.o. Howard Willard, offered new projections on US cigarette industry volumes, saying cigarette sales would continue to decline at a faster clip than they have in the past as smokers switch to e-cigarettes. Q4 2018, domestic cigarette shipment volumes declined by 4.4%, in line with the industry’s rate of decline and retail share losses. Total domestic cigarette industry volumes declined by about 5% during this period due to rising health concerns and increased awareness, leading people to switch to non-combustible products. At the same time, cigar shipments increased by 2.9% due to lower prices.
Altria reported net revenue of US$4.78 billion for the fourth quarter of 2018, marking a growth of 1.5% on a year-on-year basis. IT met the consensus EPS estimates with an adjusted earnings per share of US$0.95 in Q4 2018, 4.4% higher than US$0.91 in Q4 2017. However, it fell marginally short of analysts’ expectations for revenue, primarily due to the continuing trend of decline in cigarette shipments and under-performance in the company’s wine segment, partially offset by higher price realization and revenue generation from its smokeless products.
However, over the last few years, Altria’s smokable products segment, which is the company’s largest segment and contributes 85% of total revenues, has been witnessing price increases, as it was the only step the company resorted to in face of declining volumes.
Going forward, Altria expects the smokeless products division to be the fastest growing segment for the company, with an expected revenue growth of 10.5% in 2019.