uploads///FQ Smokeless segment

Smokeless Tobacco Products Boost Altria’s 4Q15 Results

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Fiscal 4Q15 revenue and shipment volume

Altria’s (MO) smokeless tobacco product segment’s net revenue increased 4.7% in fiscal 4Q15 and 3.9% for the full year to $0.5 billion. The increase was benefited by higher pricing, partially offset by higher promotional investments.

Despite higher pricing, the smokeless products shipment volume increased 4.0% in fiscal 4Q15 and 2.5% for the full year. It was driven by volume growth in Copenhagen, which was partially offset by declines in Skoal and other portfolio brands. Copenhagen’s shipment volume increased 8.2% in fiscal 4Q15.

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Operating income

The smokeless products segment’s reported and adjusted operating income increased 8.2% in fiscal 4Q15 due to higher pricing, partially offset by higher promotional investments. Reported operating income grew 4.4% for the full year due to higher pricing, partially offset by higher promotional investments and higher costs driven by Altria’s Nu Mark subsidiary.

Copenhagen and Skoal increased their combined retail share by three-tenths for the year. Copenhagen’s retail (XRT) share grew 1.1 share points, and Skoal’s retail share declined 0.9 share points.

Smokeless tobacco products by peers

Peers Reynolds American (RAI), Imperial Tobacco (ITYBY), and Japan Tobacco (JAPAF) also produce smokeless tobacco products. Reynolds American’s subsidiary American Snuff produces moist snuff brands such as Grizzly and Kodiak. ITYBY’s and JAPAF’s smokeless tobacco products are Skruf Snus and Zerostyle Mint, respectively.

Other companies such as British American Tobacco (BTI) and Philip Morris International (PM) don’t have a presence in smokeless tobacco products.

Strong awareness

With continuing growth in the Copenhagen brand, Altria’s subsidiary USSTC (U.S. Smokeless Tobacco Company) plans to expand Copenhagen Mint nationally later this quarter. Copenhagen Mint will be available at a popular price, and USSTC will support its expansion with a strong awareness and trial-generating plan.

PM has exposure in the First Trust Consumer Staples AlphaDEX ETF (FXG) with 3.1%[1. updated as of January 28, 2016] of the total weight of the portfolio.

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