01—Abstract
Summary
Summary of the 10-K/A filed May 31, 2018. Cited figures are marked; the original filing is the authoritative source.
Altria Group, Inc.'s 2017 10-K filing, though an amendment, provides insights into its financial performance and strategic positioning, primarily centered around its core tobacco businesses.
The company continues to navigate a challenging but resilient market, characterized by declining cigarette volumes but offset by pricing power and diversification efforts. Investors should note Altria's ongoing commitment to returning capital to shareholders through dividends, a long-standing strategy that remains a key component of its investment thesis. The filing also touches upon regulatory risks and the company's efforts to adapt to evolving consumer preferences and industry trends, including investments in reduced-risk products.
02—Key points
Key Highlights
- Declining cigarette volumes continue to be a headwind, a trend consistent within the tobacco industry.
- Strong pricing power in its combustible tobacco portfolio is a key factor mitigating volume declines and supporting revenue.
- Altria's commitment to shareholder returns, particularly through consistent dividend payments, remains a core tenet for investors.
- The filing indicates ongoing efforts to adapt to evolving consumer preferences and regulatory landscapes.
- Inclusion of AB InBev financial statements by reference suggests a significant investment or strategic relationship with the beverage giant.
- The amendment nature of the filing may indicate adjustments or additional disclosures to the original report.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2017, Altria Group, Inc. kept $0.40.
- Revenue$25.58B100.0%
- Cost of revenue−$13.61B53.2%
- Gross profit$11.96B46.8%
- Operating costs−$2.37B9.3%
- Operating income$9.59B37.5%
- Interest, other & tax$629.0M2.5%
- Net income$10.22B40.0%
Where FY2017 revenue went
$25.58B- Operating income: $9.59B, 38% of revenue
- Other operating costs: $8.20B, 32% of revenue
- Cost of revenue: $7.54B, 29% of revenue
- R&D: $241.0M, 0.9% of revenue
Kept 38% as operating income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-K/AFY2017filed May 31, 2018Financial Statements
FY2017 against FY2016
| Line item | FY2017FY2016 | Change |
|---|---|---|
| Revenue | $25.58B$25.74B | −0.7% |
| Cost of Revenue | $7.54B$7.75B | −2.6% |
| Gross Profit | $11.96B$11.57B | +3.4% |
| R&D Expenses | $241.00M$203.00M | +18.7% |
| Operating Income | $9.59B$8.76B | +9.5% |
| Interest Expense | $736.00M$754.00M | −2.4% |
| Net Income | $10.22B$14.24B | −28.2% |
| EPS (Basic) | $5.31$7.28 | −27.1% |
| EPS (Diluted) | $5.31$7.28 | −27.1% |
| Shares Outstanding (Basic) | 1.92B1.95B | −1.6% |
| Shares Outstanding (Diluted) | 1.92B1.95B | −1.6% |
05—Questions
Frequently Asked Questions
What are Altria's primary revenue drivers?
Altria's primary revenue drivers remain its combustible tobacco products, particularly Marlboro cigarettes, where strong pricing power helps offset declining volumes. The company also has investments and strategic interests in other areas, including alcoholic beverages through its stake in AB InBev.
How is Altria addressing the secular decline in cigarette smoking?
Altria is addressing the decline in smoking rates through a combination of premium pricing strategies on its traditional products and investments in alternative product categories, such as reduced-risk tobacco and nicotine products. This aims to capture evolving consumer preferences and mitigate the impact of volume erosion.
What is the significance of the AB InBev financial statements being incorporated by reference?
The incorporation of AB InBev financial statements suggests a material investment or significant ongoing relationship between Altria and Anheuser-Busch InBev. This indicates that Altria's performance and financial reporting are influenced by, or require disclosure related to, its stake in the global beverage company.
What are the key risks highlighted in the filing?
While specific risks are detailed in the full 10-K, typical risks for Altria include intense regulation of tobacco products, potential litigation, evolving consumer preferences away from traditional tobacco, and the potential impact of its diversification strategies and investments.
06—Continue