Summary
Altria Group, Inc. reported its first quarter 2009 financial results, marked by the significant acquisition of UST Inc. for approximately $11.7 billion. This acquisition, completed in January 2009, has led to the integration of UST's smokeless tobacco and wine businesses into Altria's reporting segments. Despite the substantial debt incurred to finance this acquisition, including a $4.2 billion issuance of senior unsecured notes, the company managed its liquidity effectively. Net revenues saw a modest increase driven by the inclusion of UST's results and higher pricing in certain segments, though this was partially offset by declining cigarette volumes and increased interest expenses. Financially, the quarter presented a mixed picture. Earnings from continuing operations saw a slight decrease compared to the prior year, primarily due to higher interest expenses, acquisition-related costs, and lower equity earnings from SABMiller. However, the company's adjusted diluted EPS from continuing operations, which excludes certain charges, showed modest growth, indicating underlying operational strength. Altria also announced a 2009 full-year EPS forecast that includes significant charges but anticipates growth in adjusted EPS, signaling confidence in its core businesses despite ongoing challenges in the tobacco industry, such as increasing excise taxes and regulatory scrutiny.
Financial Highlights
23 data pointsKey Highlights
- 1Completed the acquisition of UST Inc. for approximately $11.7 billion, integrating its smokeless tobacco and wine businesses.
- 2Issued $4.2 billion in senior unsecured long-term notes and $0.835 billion in commercial paper to fund the UST acquisition and manage liquidity.
- 3Reported a slight decrease in earnings from continuing operations to $589 million ($0.28 per share) compared to $614 million ($0.29 per share) in the prior year's quarter, impacted by acquisition costs and higher interest expenses.
- 4Cigarette segment net revenues decreased by 8.0% primarily due to lower shipment volumes, though operating companies income increased due to pricing actions and reduced promotional spending.
- 5Smokeless products segment, now including UST, reported an operating loss of $2 million, impacted by acquisition-related charges and pricing strategies to enhance brand value.
- 6Wine segment, also acquired with UST, showed a decline in shipment volume but improved retail volume, with net revenues of $75 million and an operating companies income of $1 million (after acquisition costs).
- 7Announced a 2009 full-year EPS forecast between $1.47 and $1.52, including significant charges, with an anticipated adjusted diluted EPS growth of 3% to 6% over 2008.