Altria Inc.’s (MO – Analyst Report) adjusted earnings of 75 cents per share in the third quarter of 2015 were in line with the Zacks Consensus Estimate. Earnings, however, exceeded the prior-year quarter figure by 8.7% backed by strong performance of the core tobacco business and the leading premium brands.
Revenues and Margins
Revenues, net of excise taxes, increased 4.7% to $5.0 billion year over year backed by higher sales in all the segments. Revenues also surpassed the Zacks Consensus Estimate of $4.97 billion by 0.6%.
Supported by lower excise tax levied on products and cost of sales, gross profit went up 13.9% from the year-ago quarter to $3.0 billion. Operating income increased 15.4% year over year to $2.3 billion backed by lower administrative expenses.
Segment Details
Smokeable Products Segment: Revenues increased 4.7% year over year to $4.35 billion driven by higher pricing.
Shipment volume remained almost flat at 33.53 billion units with the prior-year quarter primarily due to moderation in the industry’s rate of decline and retail share gains.
While cigarettes retail share gained 0.4 percentage point (pp) backed by higher gains in Marlboro and Discount brands, retail share for cigars declined 0.7 pp. Marlboro’s retail share went up 0.1 pp to 43.9%.
Adjusted operating income rose 11.1% year over year to $2.04 billion on the back of higher pricing. Operating income margins inflated 2.7 pp to 47.0%.
Smokeless Products: Revenues gained 4.2% to $448 million on the back of higher volume.
Smokeless Products’ shipment volume increased 0.9% to 204.9 million units backed by 1.7% rise in Copenhagen and Skoal shipment volume.
Copenhagen brand’s retail share gained 0.7 pp, while Skoal witnessed a 0.5 pp dip primarily due to competitive activity.
Adjusted operating companies’ income increased 2.5% year over year to $286 million backed by higher revenues and lower excise tax. Operating companies’ income margin shrank 1.1 pp to 63.8%.
