The U.S.’s largest tobacco company Altria Group Inc. (NYSE:MO) stake in beer firm Anheuser-Busch InBev NV was proved a blessing in the final three month of the year as cigarette volumes constantly decreased and market share in the company’s lead segment remained flat.
In the latest quarter cigarette shipment volume dropped 4.8% amidst an overall industry weakening and one less shipping day. Cigar volume was 5.3% higher and total smokable products dropped 4.7%.
Meanwhile Altria Group Inc. (NYSE:MO), faces strong rivalry from No. 2 player Reynolds American Inc. In the latest quarter, Altria’s cigarette market share stayed flat year over year at 51.4%, as Marlboro endured flat while a 0.1% rise in discount brands retail share was counterbalance by and a 0.1% drop in other premium cigarette sales. For cigars, Altria’s market share slid to 26.6% from 27.4%.
Furthermore during the three month period, Altria received a share of the even more bigger Anheuser-Busch InBev following the Belgian brewer’s just closed roughly $100 billion takeover of competitor SABMiller PLC.
According to reports, The U.S. Tobacco Firm got $5.3 billion in cash and a 9.6% share of AB InBev in exchange for its 27% stake in SABMiller. Moreover Altria said it would have two seats on AB InBev’s board of directors, allowing it to endure using equity accounting practices to report its share of the brewer’s profit as earnings.
All in all during the December period, Altria’s earnings surged to $10.28 billion, or $5.27 a share, from $1.25 billion, or 64 cents a share, year over year. Earnings were boosted largely by the AB InBev/SABMiller transaction gain. Excluding items, per-share earnings surged to 68 cents. Analysts polled by Thomson Reuters had predicted earnings of 67 cents.
Net revenue after excise taxes surged 0.1% to $4.7 billion, just short of analyst prediction for $4.8 billion.
Looking ahead Altria Group Inc. (NYSE:MO) estimate 2017 adjusted earnings in a range of $3.26 to $3.32 a share. That is less than the $3.33 a share analysts have projected.