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Philip Morris Outperformed Altria’s Revenue Growth in 2018

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Philip Morris’s revenue growth

Philip Morris International (PM) posted net revenue excluding excise tax of $29.63 billion in 2018, which implies growth of 3.1% from $28.75 billion in 2017. The favorable pricing and the favorable impact from the billing of certain distribution rights on customers drove the company’s revenue during the period. However, unfavorable currency and cigarette volume/mix offset some of the revenue growth during the period.

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The favorable pricing variance contributed $1.49 billion to Altria’s 2018 revenue, while the favorable impact from the billing of certain distribution rights on customers contributed $216 million. However, unfavorable currency translation negatively impacted the company’s revenue by $103 million. The unfavorable volume/mix lowered the company’s revenue by $724 million.

During the year, the total shipment volume of cigarettes and heated tobacco units declined by 2.1% with the shipment volume of cigarettes falling by 2.8%, while the shipment volume of heated tobacco units increased by 14.2%. The shipment volume of heated tobacco units increased due to the strong performance in the EU region, Korea, and Russia, which was partly offset by weakness in the sales of heated tobacco units in East Asia and Australia.

Altria’s revenue growth

Altria Group (MO) posted net revenue of $19.63 billion, which represents a rise of 0.7% from $19.49 billion in 2017. The revenue growth was driven by growth in the smokeless products segment and others, partially offset by a decline in net revenue from the wine segment. The net revenue from the smokeable product segment was relatively flat.

The net revenue from the smokeless product segment increased by 5.3% driven by higher pricing and a decline in promotional investments partially offset by a fall of 1% in shipment volume of smokeless products.

During the period, the shipment volume of the smokeable products segment fell by 5.7% with the shipment volume of cigarettes falling by 5.8%, while the shipment volume of cigars rose 3.8% during the period. However, higher pricing and lower promotional investments offset the effect of the decline in revenue due to lower shipment volume. The net revenue from the wine segment declined by 0.7% due to lower shipment volume partially offset by favorable mix.

Next, we will look at the EPS of Philip Morris and Altria in 2018.

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