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What Led Altria’s Revenue to Fall in Q1 2019?

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First-quarter performance

For the first quarter of 2019, Altria Group (MO) posted revenue, net of excise tax, of $4.39 billion against analysts’ estimate of $4.59 billion. Year-over-year, the company’s revenue fell by 6.0%. The decline in revenue from the smokeable products segment lowered the company’s revenue, which was partially offset by growth in revenue from the smokeless product segment and wine segment.

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Smokeable products segment

For the quarter, the segment posted a revenue, net of excise tax, of $3.73 billion, which represents a fall of 7.0% from $4.01 billion in the corresponding quarter of 2018. The decline in domestic cigarette shipment volume lowered the company’s revenue, which was partially offset by favorable pricing and lower promotional investments. Due to unfavorable trade inventory movements, one less day of shipment, and industry decline, the cigarette shipment volume of Altria fell during the quarter. However, the shipment volume of cigars increased by 1.1% driven by a strong performance from Black & Mild.

Smokeless products segment

For the quarter, the segment has posted a revenue of $509 million, which represents a rise of 3.2% from $493 million in the first quarter of 2018. Favorable pricing and lower promotional investments drove the company’s revenue, which was partially offset by a decline of 2.2% in shipment volume. During the quarter, the shipment volume of Skoal fell by 8.5%, while the shipment volume of Copenhagen rose 0.6%.

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Wine segment

The revenue from the segment rose 6.6% to $146 million for the quarter. The increase in shipment volume drove the company’s revenue, which was partially offset by higher promotional investments.

Peer comparison

In the comparable quarter, Philip Morris International (PM) posted a revenue of $6.75 billion, which represents a fall of 2.1% from $6.90 billion in the first quarter of 2018.

For 2019, analysts are expecting Altria to post revenue of $19.77 billion, which represents a rise of 0.7% from $19.63 billion in 2018.

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