Volume down sharply

| February 2, 2018

Philip Morris USA’s cigarette shipment volume during the 12 months to the end of December, at 116,606 million, was down by 5.1 percent on that of the 12 months to the end of December 2016, 122,930 million.

Marlboro shipments were down by 5.1 percent to 99,974 million, while shipments of other premium brands were down by 6.5 percent to 5,967 million.

Discount brand shipments were down by 5.2 percent to 10,665 million.

PM USA’s share of the US retail cigarette market during the year to the end of December, at 50.7 percent, was down by 0.4 of a percentage point. Marlboro’s share was down by 0.4 of a percentage point to 43.3 percent, while that of the company’s other premium brands was down by 0.1 of a percentage point to 2.7 percent. The company’s discount-brands’ share was up by 0.1 of a percentage point to 4.7 percent.

In reporting its results yesterday, Altria said that PM USA’s reported domestic cigarettes shipment volume had decreased by 5.1 percent during 2017, primarily driven by the industry’s rate of decline, retail share declines, and one fewer shipping day. ‘When adjusted for calendar differences, PM USA’s domestic cigarettes shipment volume decreased by an estimated five percent,’ it said. ‘Total cigarette industry volumes declined by an estimated four percent.’

Middleton’s cigar shipments during the year to the end of December, at 1,542 million, were up by 9.9 percent on those of the year to the end of December 2016, 1,403 million.

Shipments of Black & Mild cigars were up by 10.7 percent to 1,527 million, while shipments of other brands were down by 37.5 percent to 15 million.

Meanwhile, USSTC’s smokeless product shipments (cans and packs) during the year to the end of December, at 841.3 million, were down by 1.4 percent on those of 2016, 853.5 million.

Copenhagen shipments were increased by 1.2 percent to 531.6 million, while Skoal shipments were down by 7.3 percent to 241.9 million.

Other-brand shipments were up by 0.4 percent to 67.8 million.

USSTC’s share of the retail market in smokeless tobacco was down by 1.0 percentage point to 53.7 percent. Copenhagen’s share was increased by 0.5 of a percentage point to 33.7 percent, while Skoal’s share was down by 1.4 percentage points to 16.7 percent. The share of the company’s other brands was down by 0.1 of a percentage point to 3.3 percent.

In presenting the results, Altria’s chairman, CEO and president said the company had had another “strong year in 2017”.

“We delivered outstanding financial performance and continued to focus on rewarding our shareholders – paying out $4.8 billion in dividends, increasing our dividend by 8.2 percent and repurchasing more than $2.9 billion in shares. Our 2017 total shareholder return of 9.4 percent follows four consecutive years of returns exceeding 20 percent. Over this five-year period, our total shareholder return of 181 percent outperformed both the S&P 500 and S&P Food, Beverage and Tobacco Index by more than 70 percent.

“That success was built on our core tobacco businesses, which delivered strong income growth and expanded their already high margins, despite a year with some unique challenges. Further, we acquired Nat Sherman to improve our smokeable segment’s position in the growing super-premium cigarette segment.

“We also accomplished several other important strategic initiatives for future success, including making significant progress toward our goal of becoming the US leader in authorized, non-combustible reduced-risk products.

“And the passage of federal tax reform strengthens our financial capability to further invest in our businesses and reward our shareholders. We thus are forecasting 2018 full-year adjusted diluted EPS growth in a range of 15 percent to 19 percent.”

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