01—Abstract
Summary
Summary of the 10-K filed February 27, 2024. Cited figures are marked; the original filing is the authoritative source.
Altria Group, Inc. (MO) demonstrated resilience in its 2023 performance, navigating a complex operating environment characterized by inflationary pressures and evolving consumer preferences.
The company's core smokeable products segment, led by Marlboro, maintained its strong market position, though shipment volumes saw a decline, partly attributed to economic headwinds impacting consumer spending and a shift towards discount brands. To counter this, Altria implemented price increases across its cigarette portfolio, which helped to offset volume declines. The company is actively pursuing its 'Moving Beyond Smoking' strategy, with a significant focus on expanding its smoke-free portfolio.
The acquisition of NJOY in June 2023 for approximately $2.9 billiona marked a substantial step in strengthening its e-vapor offerings. Altria is also investing in its oral nicotine pouch brand, 'on!', which continues to show robust growth and gain market share within the rapidly expanding oral tobacco category. Despite these growth initiatives, the company faces ongoing regulatory scrutiny and competition, particularly from illicit e-vapor products, which continue to impact the broader market dynamics.
02—Key points
Key Highlights
- Altria reported an increase in reported net earnings to $8.13 billion from $5.76 billion in the prior year, with adjusted diluted EPS growing to $4.95 from $4.84.
- The company completed the $2.9 billion acquisition of NJOY Holdings, Inc. in June 2023, significantly bolstering its e-vapor product segment.
- Smokeable products segment net revenues decreased by 3.2% to $21.76 billion, primarily due to a 9.9% decline in cigarette shipment volume, partially offset by higher pricing.
- Oral tobacco products segment net revenues increased by 3.4% to $2.67 billion, driven by higher pricing and a growing 'on!' oral nicotine pouch brand, despite a 2.2% decrease in overall oral tobacco shipment volume.
- Altria continues its progressive dividend policy, targeting mid-single digit annual dividend per share growth through 2028, and repurchased $1 billion of its stock in 2023, with a new $1 billion repurchase program authorized for 2024.
- The company highlighted challenges in the e-vapor category, noting the significant growth of illicit flavored disposable products which negatively impact industry volume declines for both cigarettes and pod-based e-vapor products.
- Altria's investments in equity securities, particularly Anheuser-Busch InBev (ABI), provided significant positive contributions to earnings in 2023, largely due to favorable adjustments compared to impairment charges in the prior year.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2023, Altria Group, Inc. kept $0.33.
- Revenue$24.48B100.0%
- Cost of revenue−$10.20B41.7%
- Gross profit$14.28B58.3%
- Operating costs−$2.74B11.2%
- Operating income$11.55B47.2%
- Interest, other & tax−$3.42B14.0%
- Net income$8.13B33.2%
Where FY2023 revenue went
$24.48B- Net income: $8.13B, 33% of revenue
- Other operating costs: $6.50B, 27% of revenue
- Cost of revenue: $6.22B, 25% of revenue
- Interest, other & tax: $3.42B, 14% of revenue
- R&D: $220.0M, 0.9% of revenue
Kept 33% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2023filed February 27, 2024Financial Statements
FY2023 against FY2022
| Line item | FY2023FY2022 | Change |
|---|---|---|
| Revenue | $24.48B$25.10B | −2.4% |
| Cost of Revenue | $6.22B$6.44B | −3.5% |
| Gross Profit | $14.28B$14.25B | +0.3% |
| R&D Expenses | $220.00M$162.00M | +35.8% |
| Operating Income | $11.55B$11.92B | −3.1% |
| Interest Expense | $1.15B$1.13B | +1.9% |
| Net Income | $8.13B$5.76B | +41.0% |
| EPS (Basic) | $4.57$3.19 | +43.3% |
| EPS (Diluted) | $4.57$3.19 | +43.3% |
| Shares Outstanding (Basic) | 1.78B1.80B | −1.5% |
| Shares Outstanding (Diluted) | 1.78B1.80B | −1.5% |
05—Questions
Frequently Asked Questions
What was Altria's financial performance in 2023?
Altria reported a significant increase in net earnings to $8.13 billion, or $4.57 per diluted share, up from $5.76 billion, or $3.19 per diluted share, in 2022. Adjusted net earnings were $8.82 billion, or $4.95 per diluted share, a slight increase from $8.74 billion, or $4.84 per diluted share, in 2022. The growth in reported earnings was largely driven by favorable investment results, particularly from its equity investment in ABI, and lower interest expenses, partially offset by lower operating income.
How is Altria progressing with its smoke-free transition strategy?
Altria is actively pursuing its 'Moving Beyond Smoking' vision. Key initiatives include the acquisition of NJOY, a significant player in the e-vapor market, and continued growth in its 'on!' oral nicotine pouch brand. The company aims to transition adult smokers to potentially less harmful alternatives and is investing in these smoke-free product categories to achieve long-term growth.
What are the main challenges or risks facing Altria?
Altria faces several significant risks, including declining cigarette volumes due to changing consumer preferences and regulatory actions, intense competition, the growing presence of illicit flavored e-vapor products, potential future regulatory actions from the FDA (such as nicotine limits or flavor bans), and ongoing litigation related to tobacco and health. Macroeconomic pressures like inflation also impact consumer spending on tobacco products.
What is Altria's approach to returning capital to shareholders?
Altria has a history of returning capital to shareholders through dividends and share repurchases. The company has established a progressive dividend goal targeting mid-single digit annual dividend per share growth through 2028. In 2023, Altria completed a $1 billion share repurchase program and authorized a new $1 billion program for 2024, demonstrating its commitment to shareholder returns.
06—Continue