Altria's Revenue Falls as Cigarette Shipments Decline

Altria Group Inc. on Wednesday reported that revenue fell as the tobacco company saw its cigarette shipments decline, but profit increased and the company raised its guidance for the year.

Altria also said Wednesday that it expects higher proceeds based on Anheuser-Busch InBev NV's revised offer for SABMiller PLC. Altria owns a 27% stake in SABMiller.

Earnings beat expectations by a penny per share. Altria raised its earnings outlook for the year, saying it now expects adjusted earnings per share of $3.01 to $3.07, up from its previous guidance of $3 to $3.05 a share.

Still, cigarette-shipment volume fell 5% because of overall industry decline and trade inventory movements.

Altria's cigarette market share was flat at 51.4%, as a 0.1% decrease in Marlboro retail share and a 0.1% in other premium cigarette sales were offset by an increase in its discount brands. For cigars, Altria's market share fell to 26.7% from 27.8%.

The U.S.'s largest tobacco company is facing stronger competition from No. 2 player Reynolds American Inc., which last June closed a $25 billion acquisition of rival Lorillard Inc. Reynolds American said Tuesday that revenue climbed 33% in its latest quarter as it continues to benefit from the Lorillard acquisition.

Also on Tuesday, Anheuser-Busch raised its offer for its proposed $100 billion-plus beer merger with SABMiller in an attempt to assuage concerns over the valuation of the deal after the British pound's steep descent.

Altria, which said it is choosing to take in the deal in the form of a cash-and-share offer, said Wednesday that it now expects to receive about $3 billion in cash, up from $2.5 billion previously. It also expects to have a 10.5% ownership stake in the combined beer giant.

That level of ownership is key because it would allow Altria to continue to record income from the beer business through equity accounting practices, which contributes to its bottom line.

Altria's earnings rose int he second quarter to $1.65 billion, or 84 cents a share, from $1.45 billion, or 74 cents a share, a year prior. Excluding costs related to the SABMiller offer and other items, per-share earnings were 81 cents. Analysts polled by Thomson Reuters had forecast earnings of 80 cents.

Net revenue after excise taxes was $4.23 billion, up from $4.28 billion previously.

Write to Austen Hufford at [e-mail]

(END) Dow Jones Newswires

July 27, 2016 08:35 ET (12:35 GMT)

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