Altria Group Inc (MO) Posts Mixed 2023 Results and Announces $1 Billion Buyback
Net Revenues: Decreased by 2.4% to $24.5 billion in 2023.
Adjusted Diluted EPS: Grew by 2.3% to $4.95 in 2023.
Dividends: Paid out $6.8 billion in dividends in 2023.
Share Repurchase: Completed a $1 billion buyback program and announced a new $1 billion repurchase program.
2024 Guidance: Expects adjusted diluted EPS between $5.00 and $5.15, indicating a growth rate of 1% to 4%.
Smokeable Products: Reported a decrease in shipment volume by 9.9% for the year.
Smoke-Free Portfolio: Smoke-free volumes remained flat in 2023 compared to 2022.
On February 1, 2024, Altria Group Inc (NYSE:MO) released its 8-K filing, detailing its fourth-quarter and full-year earnings for 2023, and providing guidance for the 2024 fiscal year. Altria, known for its leading tobacco brands such as Marlboro and its investments in Anheuser-Busch InBev and Cronos Group, faced a challenging year with a slight revenue decline but managed to grow its adjusted diluted EPS by 2.3%. The company also announced a new $1 billion share repurchase program, signaling confidence in its financial stability and commitment to delivering shareholder value.
Company Overview
Altria Group Inc (NYSE:MO) is a dominant player in the tobacco industry, with a diverse portfolio that includes Philip Morris USA, U.S. Smokeless Tobacco, and John Middleton. The company also has a 10% interest in Anheuser-Busch InBev, the world's largest brewer. Altria's smokeless tobacco brands hold leading positions in the U.S., and its Marlboro brand remains the top cigarette brand with a 42% share in 2022. The company has expanded into the cannabis market with a 42% stake in Cronos and has recently acquired Njoy Holdings, further diversifying its offerings.
Financial Performance and Challenges
Altria's financial performance in 2023 reflected resilience in a tough market, with net revenues decreasing by 2.4% to $24.5 billion. Despite this, the company managed to grow its adjusted diluted EPS by 2.3% to $4.95. This growth is significant for a company in the tobacco products industry, which faces ongoing challenges such as regulatory pressures and changing consumer habits. Altria's performance is particularly important as it demonstrates the company's ability to navigate a declining cigarette market while pivoting towards smoke-free products and other strategic investments.
Financial Achievements and Importance
Altria's ability to maintain a stable adjusted diluted EPS amidst declining revenues is a testament to its cost management and strategic focus. The company's commitment to shareholder returns is evident in the nearly $7.8 billion delivered in dividends and share repurchases in 2023. These financial achievements are crucial for maintaining investor confidence and supporting the company's stock price in a highly competitive and regulated industry.
Key Financial Metrics and Commentary
Altria's financial results are underscored by several key metrics. The company's reported diluted EPS decreased by 22.7% to $1.16, primarily due to unfavorable tax items and special items related to its ABI investment. However, the adjusted diluted EPS remained unchanged at $1.18, balancing lower adjusted operating company income (OCI) with fewer shares outstanding and a lower adjusted tax rate. CEO Billy Gifford commented on the year's performance:
"It was a pivotal year for Altria as we made significant progress in pursuit of our Vision by enhancing our smoke-free product portfolio while our businesses performed well in a challenging environment."
Altria's focus on expanding its smoke-free product portfolio is crucial as the industry shifts away from traditional cigarettes. The company's acquisition of NJOY and its expansion plans for the NJOY ACE product highlight its commitment to adapting to consumer preferences for less harmful alternatives to smoking.
Analysis of Company's Performance
Altria's performance in 2023 reflects a company in transition, facing industry headwinds while strategically positioning itself for future growth. The flat growth in smoke-free volumes indicates challenges in gaining traction in this segment, but the company's leadership position in the U.S. tobacco space remains strong. The new share repurchase program and the projected EPS growth for 2024 suggest that Altria is confident in its strategic direction and ability to deliver value to shareholders.
For a detailed breakdown of Altria's financials and further insights into its performance, visit GuruFocus.com for comprehensive analysis and investment perspectives.
Explore the complete 8-K earnings release (here) from Altria Group Inc for further details.
This article first appeared on GuruFocus.
