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Altria Reports 2012 Fourth-Quarter And Full-Year Results; Delivers 2012 Full-Year Adjusted EPS Growth Of 7.8%

Stocks in this article: MO

The smokeless products segment's 2012 fourth-quarter reported OCI increased 27.1% primarily due to lower restructuring charges related to the cost reduction program, higher volume and higher pricing, partially offset by unfavorable mix due to growth in products introduced in recent years at a lower, popular price. 2012 full-year reported OCI increased 8.4% primarily due to higher pricing, higher volume and effective cost management, partially offset by growth in products introduced in recent years at a lower, popular price. Adjusted OCI, which is calculated excluding special items identified in Table 7, grew 9.5% for the fourth quarter of 2012, and increased 7.0% for the full year of 2012.

 
 
Table 7 - Smokeless Products: Revenues and OCI ($ in millions)
                                   
Fourth Quarter Full Year
2012             2011             Change 2012             2011             Change
Net revenues $   448             $   418             7.2   % $   1,691             $   1,627             3.9   %
Excise taxes (30 )             (27 ) (113 )             (108 )
Revenues net of excise taxes $   418               $   391   6.9 % $   1,578               $   1,519   3.9 %
 
Reported OCI $ 253 $ 199 27.1 % $ 931 $ 859 8.4 %
Asset impairment, exit, integration and implementation costs 1 32 28 35
UST acquisition-related costs               1                 2  
Adjusted OCI $   254               $   232   9.5 % $   959               $   896   7.0 %
Adjusted OCI margins*

60.8

%             59.3 %

1.5 pp

60.8 %             59.0 %

1.8 pp

                                                                                             

*Adjusted OCI margins are calculated as adjusted OCI divided by revenues net of excise taxes.

For the fourth quarter of 2012, USSTC and PM USA's combined reported domestic smokeless products shipment volume increased 9.6% primarily due to volume growth for Copenhagen and Skoal. For the full year of 2012, reported domestic smokeless products shipment volume grew 3.9% as volume growth on Copenhagen and Skoal was partially offset by volume declines on Other portfolio brands.

Copenhagen's 2012 fourth-quarter and full-year volume grew 12.4% and 10.8%, respectively, as the brand continued to benefit from products introduced in recent years, including the May 2012 expansion of Copenhagen Southern Blend into select geographies. USSTC has announced that it will expand Copenhagen Southern Blend into additional states in the first quarter of 2013. Skoal's volume increased 9.0% for the fourth quarter of 2012 and 0.6% for the full year. Skoal's full-year volume comparison was negatively impacted by the de-listing of seven stock-keeping units (SKU), partially offset by the growth of Skoal X-TRA.

After adjusting for changes in trade inventories and other factors, USSTC and PM USA estimate that their combined 2012 fourth-quarter and full-year domestic smokeless products shipment volume grew approximately 5%. USSTC and PM USA believe that the smokeless category's volume grew at an estimated rate of approximately 5% over the 12 months ended December 31, 2012. USSTC and PM USA's combined volume performance for smokeless products is summarized in Table 8.

 
   
Table 8 - Smokeless Products: Shipment Volume (cans and packs in millions)
                                                                       
                                                           
Fourth Quarter Full Year
2012             2011             Change 2012             2011             Change
 
Copenhagen 107.6 95.7 12.4 % 392.5 354.2 10.8 %
Skoal 78.4               71.9   9.0 % 288.4               286.8   0.6 %
Copenhagen and Skoal 186.0 167.6 11.0 % 680.9 641.0 6.2 %
Other 21.4               21.7   (1.4 )% 82.4               93.6   (12.0 )%
Total smokeless products 207.4               189.3   9.6 % 763.3               734.6   3.9 %
                                                                                                 

Note: Other includes certain USSTC and PM USA smokeless products. Volume includes cans and packs sold, as well as promotional units, but excludes international volume. New types of smokeless products, as well as new packaging configurations of existing smokeless products, may or may not be equivalent to existing moist smokeless tobacco (MST) products on a can for can basis. To calculate volumes of cans and packs shipped, USSTC and PM USA have assumed that one pack of snus, irrespective of the number of pouches in the pack, is equivalent to one can of MST.

Copenhagen and Skoal's combined retail share for the fourth quarter and full year of 2012 increased 1.0 and 1.6 share points, respectively. Copenhagen's 2012 fourth-quarter and full-year retail share grew 1.6 and 2.2 share points, respectively, as the brand continued to benefit from products introduced over the past several years.

Skoal's 2012 fourth-quarter retail share declined 0.6 share points primarily due to competitive activity and Copenhagen's strong performance, partially offset by share gains on its Skoal X-TRA products. Skoal's 2012 full-year retail share decreased 0.6 share points primarily due to the de-listing of seven SKUs in the second quarter of 2011, competitive activity and Copenhagen's strong performance, partially offset by share gains on its Skoal X-TRA products.

USSTC and PM USA's combined retail share for the fourth quarter of 2012 decreased 0.1 share point as retail share losses for Skoal and Other portfolio brands were mostly offset by gains by Copenhagen. For the full year of 2012, USSTC and PM USA's retail share increased 0.3 share points as gains by Copenhagen were partially offset by retail share losses for Skoal and Other portfolio brands. USSTC and PM USA's combined smokeless products retail share performance is summarized in Table 9.

 
 
Table 9 - Smokeless Products: Retail Share (percent)
                                                                       
                                                           
Fourth Quarter Full Year
2012             2011            

Percentage point change

2012             2011            

Percentage point change

 
Copenhagen 29.0 % 27.4 % 1.6 28.4 % 26.2 % 2.2
Skoal 21.9               22.5               (0.6 ) 22.2               22.8               (0.6 )
Copenhagen and Skoal 50.9 49.9 1.0 50.6 49.0 1.6
Other 4.5               5.6               (1.1 ) 4.8               6.1               (1.3 )
Total smokeless products 55.4 %             55.5 %             (0.1 ) 55.4 %             55.1 %             0.3  
                                                                                                 

Note: Retail share performance is based on data from the SymphonyIRI InfoScan Smokeless Tobacco Database for Food, Drug, Mass Merchandisers (excluding Walmart) and Convenience trade classes, which tracks smokeless products market share performance based on the number of cans and packs sold. Smokeless Products is defined by SymphonyIRI as moist smokeless and spit-less tobacco products. Other includes certain USSTC and PM USA smokeless products. New types of smokeless products, as well as new packaging configuration of existing smokeless products, may or may not be equivalent to existing MST products on a can for can basis. USSTC and PM USA have assumed that one pack of snus, irrespective of the number of pouches in the pack, is equivalent to one can of MST. All other products are considered to be equivalent on a can for can basis. It is SymphonyIRI's standard practice to periodically refresh its InfoScan syndicated services, which could restate retail share results that were previously released.

WINE

Ste. Michelle delivered strong 2012 fourth-quarter and full-year adjusted OCI growth through higher pricing, improved premium mix and higher shipment volume.

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