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Altria’s Revenue Breakdown In 2021 And Growth Rates

One of Altria’s brand names: Marlboro. Source: Flickr

It would be an understatement to say that Altria (NYSE:MO) is a cigarette company.

For years, Altria has been diversifying into different areas, including alcohol and cannabis, while still aggressively strengthening its core tobacco businesses.

As of 2Q 2021, Altria holds several businesses that are made up of the following subsidiaries:

  • Philip Morris USA – the maker of Marlboro cigarettes
  • U.S. Smokeless Tobacco Company – the maker of Copenhagen and Skoal
  • John Middleton – the maker of Black & Mild cigars
  • Helix Innovations – the maker of on! oral nicotine pouches
  • Ste. Michelle Wine Estates – a collection of distinctive wine estates

Aside from the business holdings above, Altria also has strategic investments and agreements with other companies, including:

  • 35% economic interest in JUUL Labs – U.S. leading e-vapor company
  • 10.1% ownership in Anheuser-Busch InBev – the world’s largest brewer
  • 45% ownership in Cronos Group – a leading global cannabinoid company
  • Exclusive U.S. license to commercialize Philip Morris International’s IQOS product – the only heated tobacco product authorized by the US FDA

With a portfolio of businesses and investments that span across the tobacco, cannabis and alcohol industries, Altria is determined to transition the company from, perhaps, a cigarette player into a conglomerate of multiple businesses.

But just how successful has Altria been in its transition and possibly, the turnaround?

To figure this out, we will look into the company’s revenue growth for the last couple of years and also the revenue breakdown by segment to find out how each business unit has performed over the years.

Without any hesitation, let’s move on!

Altria’s Net Revenue (Yearly)

Altria's annual revenue

Altria’s annual revenue

* Annual net revenue is a GAAP measure and is obtained from Altria’s income statements.
* Annual net revenue shown is revenue net of excise taxes.
* Projected revenue for 2021 and 2022 is obtained from Yahoo Finance.
* Altria’s fiscal year begins on Jan 1 and ends on Dec 31.

Let’s first look at Altria’s net revenue on an annual basis as shown in the chart above for the period from fiscal 2016 to 2020.

Fiscal 2021 and 2022 revenues net of excise taxes are projected figures according to 15 analysts from Yahoo Finance.

For your information, the net revenue shown is the revenue net of excise taxes consolidated at the company level.

Over the past 5 years, Altria’s net revenue has increased steadily and reached a record high at more than $20 billion by 2020.

According to the chart, Altria’s net revenue grew the most in 2020, by more than $1 billion, to $20.8 billion.

While Altria’s net revenue also had increased prior to 2020, it had not been as good as in 2020.

In fact, Altria’s net revenue grew even more during the outbreak in fiscal 2020, illustrating that perhaps, people actually consumed more tobacco products when facing a difficult situation.

Going into the end of fiscal 2021 and 2022, Altria’s revenue is expected to moderate to only $21.3 billion and $21.6 billion, representing a growth rate of 2% and 1.4%, respectively.

Altria’s Net Revenue Breakdown By Segment (Yearly)

Altria revenue breakdown by segment (yearly)

Altria revenue breakdown by segment (yearly)

* Annual net revenue by segment is a GAAP measure and is obtained from Altria’s earnings presentation.
* Annual net revenue by segment shown in the chart is net of excise taxes.
* Altria’s fiscal year begins on Jan 1 and ends on Dec 31.

Next, we look at Altria’s annual net revenue by product segment.

As shown, Altria’s product segments can be divided into 3 categories, and they are smokeable products, oral tobacco products and wine.

Accordingly, Altria’s smokeable product or the combustible segment has been the company’s main revenue stream, earning roughly $16 billion per annum.

The 2nd largest revenue contributor goes to Altria’s oral tobacco or the non-combustible segment, at about $2 billion per annum.

The smallest is Altria’s wine category which earns about $600 million per annum.

Between 2016 and 2020, Altria has been able to grow its smokeable and oral tobacco revenues by a reasonable growth rate.

In contrast, Altria’s wine revenue has decreased over the same period between 2016 and 2020.

Altria’s Net Revenue Growth Rates (Year Over Year)

Altria total revenue and revenue by product growth rates (year over year)

Altria total revenue and revenue by product growth rates (year over year)

* Year over year growth rates are calculated by the author using Altria’s annual revenue net of excise taxes and revenue by product categories net of excise taxes.
* Altria’s fiscal year begins on Jan 1 and ends on Dec 31.

Based on the chart above, Altria’s total revenue grew the most in 2020 at 5.3% year over year, indicating that the company’s total sales were largely unaffected by the COVID-19 pandemic.

Similarly, Altria’s smokeable or combustible products experienced the same growth pattern where this product segment grew the most in 2020 at a massive 6.5% year over year.

Prior to 2020, Altria’s smokeable products had only modest growth rates at less than 1%.

Altria’s oral tobacco or non-combustible product segment had grown quite well between 2015 and 2020, but it grew even better in 2020 at 7.3% year on year.

On the flipped side, Altria’s wine sector has been having negative growth rates in the last 5 years, and its growth rate was the worst in 2020 at -10.9%.

In short, Altria had the best years in 2020, with an overall growth rate beating all prior records.

In fact, Altria sold more of its smokeable and smokeless tobacco products in 2020 when the COVID-19 outbreak was at its worst.

Altria’s Net Revenue (Quarterly)

Altria's quarterly revenue

Altria’s quarterly revenue

* Quarterly net revenue is a GAAP measure and is obtained from Altria’s income statements.
* Quarterly net revenue shown in the chart are comprised of both revenue before excise taxes and revenue net of excise taxes.
* Altria’s fiscal year begins on Jan 1 and ends on Dec 31.

From a quarterly perspective, Altria’s total revenue has been mostly flat between 2017 and 2020, averaging around $6.4 billion and $5 billion for net revenues and revenues net of excise taxes, respectively.

In 2021 Q2, Altria earned a quarterly net revenue and revenue net of excise taxes of $6.9 billion and $5.6 billion, respectively.

Despite the challenges of the COVID-19 pandemic from 2020 to 2021, Altria continued to execute efficiently, reporting a year-on-year growth rate of around 8% and 10% for both net revenue and revenue net of excise taxes, respectively, in the 2nd quarter.

In short, Altria has been able to emerge from the COVID-19 outbreak relatively unscathed.

Altria’s Net Revenue (TTM)

Altria's TTM revenue

Altria’s TTM revenue

* TTM net revenue is a GAAP measure and is computed using the quarterly data obtained from Altria’s income statements.
* TTM net revenue consists of the sum of the quarterly data on a trailing 12-month or 4-quarter basis.
* TTM net revenue shown in the chart are comprised of both revenue before excise taxes and revenue net of excise taxes.
* Altria’s fiscal year begins on Jan 1 and ends on Dec 31.

The trailing 12-month or TTM plot is best used to check on the long-term trend of Altria’s net revenues.

From a TTM perspective, Altria’s net revenue and revenue net of excise taxes continued to scale to new highs.

As of 2021 Q2, Altria’s net revenue and revenue net of excise taxes reached record highs at $26.4 billion and $21.2 billion, respectively.

Again, despite the negative impact of the COVID-19 on most businesses, Altria seems to be able to defy the pandemic disruption and even thrive in the age of COVID.

Altria’s Revenue Breakdown by Product Segment

Altria's quarterly revenue by segment

Altria’s quarterly revenue by segment

* TTM net revenue breakdown by product segment is computed by the author using quarterly revenue before excise taxes obtained from Altria’s income statements.
* TTM data consists of the sum of the quarterly data on a trailing 12-month or 4-quarter basis.
* Altria’s fiscal year begins on Jan 1 and ends on Dec 31.

As seen in the prior discussion, Altria’s revenue segments are broken down into 3 reportable units as shown in the chart above.

The revenue breakdown consists of (1) smokeable products, (2)oral tobacco products and, (3) wine products, expressed in percentage on a quarterly basis.

Accordingly, Altria’s smokeable product has been the largest revenue generator, contributing close to 90% of the company’s total sales.

Altria’s smokeable product revenue proportion has been relatively unchanged over the last 4 years.

In contrast, Altria’s oral tobacco product revenue percentage has slightly increased to 9.7% as of 4Q 2020, compared to 8.4% 4 years ago.

Altria’s wine product revenue percentage has decreased to only 2.3% of the company’s total sales as of Q4 2020.

It looks like Altria is still pretty much a cigarette and cigar company, considering that its combustible product segment still makes up close to 90% of the company’s total revenue.

Lastly, Altria’s non-tobacco business such as the wine segment has actually performed worse in the last 4 years.

Therefore, Altria still has much work to do to transform itself to rely less on combustible products.

Altria’s Smokable Products Revenue (Quarterly)

Altria's quarterly smokeable products revenue

Altria’s quarterly smokeable products revenue

* Quarterly smokeable product revenue is a GAAP measure and is obtained from Altria’s income statements.
* Quarterly smokeable product revenue shown in the chart is comprised of both revenue before excise taxes and revenue net of excise taxes.
* Altria’s fiscal year begins on Jan 1 and ends on Dec 31.

Altria’s smokable products consist of mainly combustible cigarettes manufactured and sold by Philips Moris USA and Nat Sherman.

Other than cigarettes, Altria also earns a part of its revenue from cigars manufactured and sold under Middleton and Nat Sherman.

As shown in the chart above, Altria’s smokable product revenue remained relatively flat over the last 4 years.

However, Altria’s smokeable product revenue surged 10% in 2Q 2021 to $6.1 billion and $4.8 billion, respectively, for sales before excise taxes and sales net of excise taxes.

Altria’s Smokable Products Revenue (TTM)

Altria's TTM smokeable products revenue

Altria’s TTM smokeable products revenue

* TTM smokeable product revenue is computed by the author using quarterly revenue obtained from Altria’s earnings releases.
* TTM data consists of the sum of the quarterly data on a trailing 12-month or 4-quarter basis.
* Altria’s fiscal year begins on Jan 1 and ends on Dec 31.

The quarterly revenue plot for smokable products may not clearly indicate the trend.

Therefore, we look at the trailing 12-month or TTM plot above to uncover the most obvious trend.

As shown in the chart, Altria’s smokable product revenue has actually trended upward between 2017 and 2021, reaching $23.2 billion and $18.2 billion for net revenue and revenue net of excise taxes, respectively, in 2Q 2021.

Particularly, the uptrend of Altria’s TTM smokeable product revenue is clearly seen in 2020.

In fact, Altria’s TTM smokable products revenue reached multiple new highs from 2020 to 2021, illustrating the resilience of the combustible product category in the age of the COVID-19.

After all, people do smoke more cigarettes and cigars when facing a distressed environment.

Altria’s Oral Tobacco Products Revenue (Quarterly)

Altria's quarterly oral tobacco products revenue

Altria’s quarterly oral tobacco products revenue

* Quarterly oral tobacco product revenue is a GAAP measure and is obtained from Altria’s income statements.
* Quarterly oral tobacco product revenue shown in the chart is comprised of both revenue before excise taxes and revenue net of excise taxes.
* Altria’s fiscal year begins on Jan 1 and ends on Dec 31.

The oral tobacco product segment earned revenue from the sale of Copenhagen and Skoal as well as the On! oral nicotine pouches.

According to the chart, the uptrend is even more obvious for revenue generated from the sales of oral tobacco products.

Both net revenue and revenue net of excise taxes for oral tobacco products reached multiple new highs from 2020 to 2021.

As of 2021 Q2, Altria’s quarterly non-combustible product revenues reached $693 million and $658 million, respectively, for net revenue and revenue net of excise taxes.

Altria attributed the growth of revenue in the smokeless category in 2021 to higher pricing and higher shipment volume.

Altria’s Oral Tobacco Products Revenue (TTM)

Altria's TTM oral tobacco products revenue

Altria’s TTM oral tobacco products revenue

* TTM oral tobacco product revenue is computed by the author using quarterly revenue obtained from Altria’s earnings releases.
* TTM data consists of the sum of the quarterly data on a trailing 12-month or 4-quarter basis.
* Altria’s fiscal year begins on Jan 1 and ends on Dec 31.

The TTM plots above explain everything that you need to know and that is growth!

Altria’s TTM revenues in the smokeless product category have persistently trended upward in almost every single quarter in the last 4 years.

As of Q2 2021, Altria’s oral tobacco products revenue reached $2.6 billion and $2.5 billion on a TTM basis for net revenue and revenue net of excise taxes, respectively, representing a YoY growth rate of at least 4%.

Altria’s Wine Products Revenue (Quarterly)

Altria's quarterly wine products revenue

Altria’s quarterly wine products revenue

* Quarterly wine revenue is a GAAP measure and is obtained from Altria’s income statements.
* Quarterly wine revenue shown in the chart is comprised of both revenue before excise taxes and revenue net of excise taxes.
* Altria’s fiscal year begins on Jan 1 and ends on Dec 31.

In terms of wine product revenue, this segment of revenue has gone the opposite and declined substantially over the last 4 years.

In 2020 2Q, Altria’s revenue from wine products went to an all-time low at only $131 million and $126 million for net revenue and revenue net of excise taxes, respectively.

However, Altria’s wine revenue has recovered dramatically by 2Q 2021, and reached as much as $167 million and $162 million, respectively.

According to Altria, Ste. Michelle wine estates have been negatively impacted by the stay-at-home order due mainly to the COVID-19 pandemic, including lower on-premise and direct-to-consumer sales.

As a result, Altria’s wine revenue year-over-year growth has continued to decline between 2020 and 2021.

Altria’s Wine Products Revenue (TTM)

Altria's TTM wine products revenue

Altria’s TTM wine products revenue

* TTM wine revenue is computed by the author using quarterly revenue obtained from Altria’s earnings releases.
* TTM data consists of the sum of the quarterly data on a trailing 12-month or 4-quarter basis.
* Altria’s fiscal year begins on Jan 1 and ends on Dec 31.

On a TTM basis, Altria’s wine sales, both net revenue and revenue net of excise taxes, have gone to an all-time low at only $614 million and $595 million, respectively, as of 4Q 2020.

In particular, from a TTM perspective, Altria’s wine sales declined the most in 2020.

Over the chart, Altria’s wine sales decline accelerated in 2020, driven largely by the stay-at-home order that has been put in place throughout the pandemic.

By fiscal 2021 Q2, Altria’s wine revenue recovered significantly to $654 million and $635 million for net revenue and revenue net of excise taxes, respectively, representing a growth rate of around 1%.

Conclusion

In summary, Altria’s total revenue surged to an all-time high in 2020 at more than $20 billion, indicating that the company was largely unaffected by the COVID-19 outbreak.

Going to fiscal 2021 and 2022, Altria’s annual revenue is expected to moderate slightly but will still grow at around 2% to $21.3 billion and $21.6 billion, respectively.

In terms of revenue breakdown, both smokable and oral tobacco business units have reported an increase in sales, particularly in the oral tobacco product category.

In contrast, Altria’s wine segment has been significantly impacted by the COVID-19, with sales down by more than 10% year on year in 2020.

Altria’s overall revenue has trended higher, driven mainly by sales growth seen in the smokeable and oral tobacco segments.

Both smokeable and non-combustible sectors have shown resilience and even thrived in the age of the COVID-19.

Additionally, Altri has been trying to diversify to other businesses, including wine and smokeless tobacco products.

However, Altria’s majority of sales still came mainly from cigarettes and cigars, and they made up close to 90% of the company’s total sales in 2020.

In short, Altria is still literally a cigarettes and cigars company as of 2021 Q2.

You may not notice, but Altria actually paid the most excise taxes on its smokeable products as reflected in the large gap between the net revenue and revenue net of excise taxes.

On the other hand, Altria paid the least excise taxes on its wine products.

References and Credits

1. All financial figures in this article were obtained and referenced from Altria’s annual and quarterly reports available in Altria Investors Relation.

2. Featured images in this article are used under creative commons license and sourced from the following websites: Thomas Hawk and g0dd4mn[LZW].

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Disclosure

The content in this article is for informational purposes only and is neither a recommendation nor a piece of financial advice to purchase a stock.

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