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What happened
Cigarette manufacturer actions Altria Group (NYSE: MO) – the artist formerly known as Philip Morris – are down 7% at 14:05. EDT after the publication of disappointing results for the first quarter of 2019.
Altria earned $ 0.60 per share in the first quarter. The company claims that, corrected for non-recurring items (pro forma), it would actually have netted $ 0.90 per share, but would not reach the $ 0.92 per share pro forma earnings expected from Wall Street. Net sales of excise duties were $ 4.4 billion, down 6% from one year to the next and also below Wall Street forecasts.
Investors block Altria after the loss of profits. Source of the image: Getty Images.
So what
From a GAAP accounting perspective, Altria's numbers were even worse. Earnings per share of $ 0.60 declined 40% from the first quarter of last year. Net revenues (which include the collection of excise taxes) declined 5% to $ 5.6 billion.
Altria noted that traditional cigarette shipments fell by 14% from one year to the next, faster than expected. One of the measures taken by the company to offset this downward trend in tobacco sales is a $ 1.8 billion investment in a marijuana business. Cronos Group (NASDAQ: CRON), which the company claims to have completed during the quarter. Management has indicated that it now holds "45% of Cronos' economic interests and voting rights with a warrant, if exercised in full, to acquire an additional 10% interest" – which would give it the majority control of a second minority stake in JUUL vaping.
Now what
Although investors were disappointed by the quarterly figures, Altria says its expectations for the entire year remain intact. Management has reaffirmed its objectives for fiscal 2019 with pro forma earnings of between $ 4.15 and $ 4.27 per share. Taken mid-way ($ 4.21 per share), this means that despite disappointing investors in the first quarter of this year, it still intends to earn more than the expected $ 4.19 per Wall share. Street before the end of the year.
If Altria keeps its promise, the investors who sold the stock today may wish they did not do it.
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