Categories Earnings, Other Industries

Altria Group records $4.5 billion in impairment charges relating to JUUL investment in Q3

Altria Group (NYSE: MO) reported third-quarter net revenues of $6.85 billion, flat year-over-year, primarily driven by higher net revenues in the smokeless products segment. This was better than analysts’ consensus of $5.34 billion.

Earnings per share, excluding one-time items, jumped 10% to $1.19 in Q3, beating Wall Street prediction by 4 cents. The bottom-line beat was achieved as a results of lower spending and higher adjusted earnings from Altria’s equity investment in ABI.

Altria Group Q3 2019 earnings results.

MO shares were up over 1% immediately following the announcement. In the trailing six months, the stock has declined 15%.

Altria added that it recorded a non-cash pre-tax impairment charge of $4.5 billion during the quarter related to its investment in JUUL, in light of the increased likelihood of FDA action to remove flavored e-vapor products from the market. Altria has a 35% stake in popular e-cigratee maker JUUL.

READ: Understanding Apple (NASDAQ: AAPL) Q4 2019 earnings results through 4 charts

The Malboro-maker reaffirmed its guidance for fiscal 2019. It expects adjusted diluted EPS to be in a range of $4.19 to $4.27, representing a growth rate of 5% to 7%. Meanwhile, the company replaced its long-term adjusted EPS growth projection of 7% to 9% with a compounded annual adjusted EPS growth objective of 5% to 8% for the years 2020 through 2022.

Though Altria and Philip Morris (NYSE: PM) had earlier proposed a merger of equals to create a tobacco mammoth, it was later called off considering the changing consumer trends. The recent vaping incidents and a negative report from Centers for Disease Control and Prevention prompted Philip Morris to pull out of the deal.

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Both companies have, however, said they would work together on heated tobacco product  IQOS.

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