) adjusted earnings of 65 cents per share in the second quarter of
2014 were in line with the Zacks Consensus Estimate. The results,
however, exceeded the prior-year quarter's results by 4.8%, backed
by strong performance of the core tobacco business and leading
Altria Group, Inc - Earnings Surprise |
Revenues and Margins
Revenues, net of excise taxes, increased 1.0% year over year to
$4.6 billion for the quarter due to revenue gains in the smokeless
segment. Revenues were in line with the Zacks Consensus
In the quarter, gross profit increased 1.9% to $2.6 billion
compared with the prior-year quarter due to higher cost of sales.
Operating income slipped 1.3% year over year to $1.9 billion due to
higher profit and higher marketing, administration and research
Smokeable Products Segment
: Revenues inched up 0.8% to $3.96 billion as higher pricing was
offset by lower shipment volume.
Shipment volume in the quarter declined 5.0% to 32.5 billion
units compared with the prior-year quarter, primarily due to
overall decline in the industry.
Leading brands like Marlboro and L&M reported market share
gain during the quarter. However, Black & Mild reported a
decline in market share during the quarter.
Adjusted operating income increased 3.6% year over year to $1.8
billion, reflecting higher pricing. Operating income margins
inflated 1.2 percentage points (pp) to 44.2% during the
: Revenues increased 0.7% to $428 million backed by higher shipment
Smokeless products' shipment volume increased 1.6% to 203.8
million units mainly due to higher year-over-year volume of
Copenhagen and Skoal brands.
Although Copenhagen brand gained 1.5 pp retail share during the
quarter, Skoal witnessed a 1.1 pp decline in retail share primarily
due to competitive activity.
Furthermore, adjusted operating companies' income increased 5.6%
year over year to $285 million backed by improved volume and
pricing. Operating companies' income margins gained 3.1 pp to
: The segment's revenues went up 6.8% year over year to $141
million mainly due to higher pricing and improved shipments. Wine
shipment volume increased 1.9% to $1.9 million units, due to higher
distribution of the 14 Hands brand.
Adjusted operating companies' income went up 12.0% to $28
million on the back of positive pricing. Operating income margins
shrank 1.0 pp to 19.9%.
Other Financial Details
During the second quarter of fiscal 2014, Altria repurchased
approximately 3.3 million shares for approximately $132
Altria's subsidiary Nu Mark LLC (Nu Mark) began its national
expansion of MarkTen e-vapor products. MarkTen achieved
distribution in over 60,000 retail stores in the Western half of
Altria tightened its 2014 earnings guidance. The company expects
earnings in the range of $2.54 to $2.59 as against earlier
expectations of $2.52 to $2.59. The guidance reflects an increase
of 6% to 9% from $2.38 in 2013.
Altria expects 2014 earnings to benefit from lower interest
expense, lower effective tax rate and lower share count due to the
current share buyback program.
Altria carries a Zacks Rank #4 (Sell). A better-ranked stock in
the tobacco sector include
Reynolds American Inc.
) carrying a Zacks Rank #2 (Buy). Other stocks performing well in
the consumer staples sector includes
White ave Foods Inc.
) both carrying a Zacks Rank #2.
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