01—Abstract
Summary
Summary of the 10-K filed February 27, 2023. Cited figures are marked; the original filing is the authoritative source.
Altria Group, Inc. reported solid financial performance in 2022, with reported net earnings attributable to Altria of $5.8 billiona, up from $2.5 billion in 2021.
Adjusted net earnings attributable to Altria increased by 2.6% to $8.7 billionb, and adjusted diluted EPS grew by 5.0% to $4.84. This growth was driven by higher operating income in the smokeable products segment and improved pricing, partially offset by ongoing shifts in adult tobacco consumer preferences and macroeconomic pressures. The company continues its "Moving Beyond SmokingTM" strategy, aiming to transition adult smokers to smoke-free products by 2030, underscored by its investments in smoke-free innovation and partnerships.
Despite a decline in cigarette shipment volumes, Altria managed to offset this through effective pricing strategies and cost management. The oral tobacco products segment experienced a slight net revenue decrease, impacted by lower shipment volumes, though the "on!" oral nicotine pouch brand showed significant growth within its category.
The company also highlighted significant non-cash charges related to its equity investments, particularly a $2.5 billionc impairment charge for its investment in Anheuser-Busch InBev (ABI) and unrealized losses of $1.5 billion for its investment in JUUL. Altria remains committed to returning value to shareholders through dividends and share repurchases, with a new $1 billion share repurchase program authorized.
02—Key points
Key Highlights
- Reported net earnings attributable to Altria increased by over 100% to $5.8 billion in 2022, driven by favorable equity investment adjustments and operational improvements.
- Adjusted net earnings attributable to Altria increased by 2.6% to $8.7 billion, with adjusted diluted EPS growing by 5.0% to $4.84, reflecting successful pricing strategies.
- Smokeable products segment reported OCI increased by 2.8% to $10.7 billion, driven by higher pricing and lower promotional investments, despite a 9.7% decrease in cigarette shipment volume.
- Oral tobacco products segment saw a 1.1% decrease in net revenues to $2.6 billion, impacted by lower shipment volumes, though the "on!" oral nicotine pouch brand gained significant market share.
- Altria recorded significant impairments and unrealized losses on its equity investments, including a $2.5 billion non-cash impairment for ABI and $1.5 billion in unrealized losses for JUUL.
- The company completed its $3.5 billion share repurchase program in December 2022 and authorized a new $1 billion program for 2023, demonstrating a commitment to shareholder returns.
- Altria continues to advance its "Moving Beyond SmokingTM" vision with strategic initiatives like its heated tobacco stick joint venture with Japan Tobacco and its agreement to transition IQOS commercialization rights to PMI.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2022, Altria Group, Inc. kept $0.23.
- Revenue$25.10B100.0%
- Cost of revenue−$10.85B43.2%
- Gross profit$14.25B56.8%
- Operating costs−$2.33B9.3%
- Operating income$11.92B47.5%
- Interest, other & tax−$6.16B24.5%
- Net income$5.76B23.0%
Where FY2022 revenue went
$25.10B- Other operating costs: $6.57B, 26% of revenue
- Cost of revenue: $6.44B, 26% of revenue
- Interest, other & tax: $6.16B, 25% of revenue
- Net income: $5.76B, 23% of revenue
- R&D: $162.0M, 0.6% of revenue
Kept 23% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2022filed February 27, 2023Financial Statements
FY2022 against FY2021
| Line item | FY2022FY2021 | Change |
|---|---|---|
| Revenue | $25.10B$26.01B | −3.5% |
| Cost of Revenue | $6.44B$7.12B | −9.5% |
| Gross Profit | $14.25B$13.99B | +1.8% |
| R&D Expenses | $162.00M$145.00M | +11.7% |
| Operating Income | $11.92B$11.56B | +3.1% |
| Interest Expense | $1.13B$1.19B | −5.1% |
| Net Income | $5.76B$2.48B | +132.9% |
| EPS (Basic) | $3.19$1.34 | +138.1% |
| EPS (Diluted) | $3.19$1.34 | +138.1% |
| Shares Outstanding (Basic) | 1.80B1.84B | −2.2% |
| Shares Outstanding (Diluted) | 1.80B1.84B | −2.2% |
05—Questions
Frequently Asked Questions
What was Altria's financial performance in 2022?
Altria reported strong financial results in 2022. Reported net earnings attributable to Altria were $5.8 billion, a significant increase from $2.5 billion in 2021. Adjusted net earnings attributable to Altria grew by 2.6% to $8.7 billion, and adjusted diluted earnings per share (EPS) increased by 5.0% to $4.84. This performance was driven by effective pricing strategies, particularly in the smokeable products segment, and managed cost structures, though partially impacted by macroeconomic pressures and shifts in consumer preferences.
How did Altria's investments in other companies perform in 2022?
Altria's equity investments experienced significant fluctuations. The company recorded a $2.5 billion non-cash impairment charge for its investment in Anheuser-Busch InBev (ABI) due to macroeconomic and geopolitical factors. Additionally, Altria recognized $1.5 billion in unrealized losses related to its investment in JUUL, primarily due to regulatory uncertainties surrounding JUUL's products and liquidity concerns. These significant non-cash charges impacted reported earnings.
What is Altria's strategy for the future, and how is it progressing?
Altria is executing its 'Moving Beyond SmokingTM' strategy with a vision to responsibly lead the transition to a smoke-free future by 2030. This involves investing in smoke-free products and innovation. Key strategic moves in 2022 included a joint venture with Japan Tobacco for heated tobacco stick (HTS) products in the U.S. and an agreement to transition U.S. commercialization rights for the IQOS System to Philip Morris International. The company also reported growth in its 'on!' oral nicotine pouch brand, indicating progress in diversifying its product portfolio beyond traditional cigarettes.
How is Altria returning capital to shareholders?
Altria continues to prioritize shareholder returns. In 2022, the company completed a $3.5 billion share repurchase program. Furthermore, in January 2023, Altria's Board of Directors authorized a new $1.0 billion share repurchase program. The company also maintained its commitment to dividends, increasing its quarterly dividend rate by 4.4% and maintaining a target dividend payout ratio of approximately 80% of adjusted diluted EPS.
06—Continue