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.
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Altria Group  (MO) - Get 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.

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.