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Marlboro Maker Altria Beats Expectations Despite Juul Write-Down

Cigarette producer Altria beat expectations even after taking a write-down on its investment in e-cigarette maker Juul.

Altria Group  (MO) - Get Altria Group Inc Report beat Wall Street's earnings and revenue expectations even as the parent of Marlboro cigarettes took a $2.6 billion impairment charge related to its investment in e-cigarette maker Juul Labs.

Separately, Juul Labs cut its valuation to about $10 billion from $12 billion at the end of last year, Reuters reported.

Shares of Altria, Richmond, Va., at last check were up 1.4% to $37.40.

Altria reported its net loss narrowed to $952 million, or 51 cents a share, from $2.6 billion, or $1.39, in the year-earlier quarter.

Excluding non-recurring items, such as the Juul investment, adjusted earnings came to $1.19 a share, above the FactSet forecast of $1.16.

Revenue net of excise taxes rose 4.9% to $5.68 billion, beating FactSet's call for $5.53 billion.

Altria recorded a loss of 8 cents a share related to its stake in cannabis company Cronos Group, which continues to feel the effects of covid-19, the company said.

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That's due in part to government action requiring closures or limited occupancy of retail stores in the U.S.. 

Altria said that year to date it has recorded charges of $50 million related to the coronavirus pandemic.

Total cigarette shipments came to 27.62 billion, down 0.4%. Marlboro shipments rose 0.7% to 24.26 billion. 

Altria expects 2020 adjusted profit to total $4.30 to $4.38 per share, while FactSet is calling for $4.33.

Juul’s new valuation was influenced by recent decisions to exit certain markets and related restructuring costs, Reuters reported, citing a memo to Juul employees from CEO K.C. Crosthwaite.

The company was valued at $38 billion in December 2018 when Altria took a 35% stake in the company. The e-cigarette market came under fire due to concern about marketing smokeless smoking devices to teenagers.

“Today’s valuation does not surprise me, and I expect other investors to also arrive at lower valuation marks that factor in our recent restructuring,” he said.

In April, the Federal Trade Commission filed a lawsuit to undo Altria's $12.8 billion investment in the e-cigarette maker.