Description

Altria Group: The Illicit E-Vapor Headwind Is The Structural Pressure The Volume Trends Mask!

Altria Group delivered a stronger first quarter than initially implied by its full-year phasing expectations, supported by resilient smokeable products profitability, favorable net pricing, moderated cigarette volume pressure and continued shareholder returns. Adjusted diluted EPS increased 7.3%, while the smokeable products segment generated 6.3% adjusted operating companies income growth and expanded adjusted margins to 65.1%. Management attributed the better start mainly to reduced cross-category movement from cigarettes into illicit flavored disposable e-vapor products, which helped domestic cigarette volume declines moderate. Reported domestic cigarette volumes fell 2.4%, while adjusted shipment volumes declined an estimated 4%, better than the estimated 5% decline for the broader cigarette industry. This moderation is a positive for near-term cash generation, but it does not eliminate the structural pressure on combustible volumes. Marlboro’s performance was mixed. The brand lost 1.