Growth Initiatives and Outlook for Tobacco Companies in 4Q15
What’s Next for Big Tobacco after 3 Robust Quarters in 2015?
EPS guidance
Tobacco companies Philip Morris International (PM), British American Tobacco (BTI), and Japan Tobacco (JAPAF) (JAPAY) have a presence outside the US. This makes these companies vulnerable to foreign exchange translations. During the 3Q15 earnings release, Philip Morris International announced that it expects its EPS (earnings per share) to grow in a range on 11%–12% versus its 2014 adjusted EPS of $5.02, on a currency neutral basis.
The growth comes notwithstanding the significant incremental investments the company expects to make in the fourth quarter to support the expansion of iQOS. Philip Morris has been capitalizing on the growth potential of iQOS and plans to commercialize its expansion in additional cities in Italy and Japan by 4Q15.
Reynolds American Inc. (RAI) also tightened its full-year adjusted earnings per share guidance to be in the range of $1.94–$2.00 per share. The company is planning to come up with innovative new product portfolio in 4Q15.
Altria Group (MO) expects moderated adjusted diluted EPS results in the fourth quarter of 2015 versus the prior year. The company expects its full-year 2015 EPS to be in the range of $2.76–$2.81, representing a growth rate of 7.5%–9.5% from an adjusted diluted EPS of $2.57 in 2014.
Innovative products
Reynolds American’s RJR Vapor’s Vuse continues to invest in the development of a robust pipeline of innovation like digital technology to deliver a consistent flavor. The company also consolidated manufacturing operations for Vuse at RJR’s Tobaccoville facility in September.
Also, Altria Group’s Nu-Mark continues to expand distribution of MarkTen XL e-vapor products and also continued to evaluate the retail (XRT) positioning of Green Smoke e-vapor products through several lead markets. To learn more about Altria’s Nu Mark subsidiary, please read Altria’s Nu Mark Subsidiary: Innovation in Tobacco Products.
To learn more about Philip Morris, Altria, and Reynolds American please read our business overview series: The Future of Tobacco Giant Philip Morris: an Inside-Out Breakdown, An Inside-Out Breakdown of Altria Group, a Diversified US Tobacco Giant, and An Essential Guide to Leading Tobacco Giant Reynolds American: Investor Must-Knows.
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