Juul forces tobacco giant Altria to take $4.1B write-down

Juul forces tobacco giant Altria to take $4.1B write-down”

Analysts polled by FactSet predict $4.45 per share. Consensus estimates called for EPS of $1.02 and revenue of $4.88 billion.

Shares of USA tobacco giant Altria tumbled on Wall Street Thursday after the tobacco giant released a fourth-quarter earnings report that showed it took a $4.1 billion hit due to its investment in e-cigarette maker Juul, which is under legal fire amid a rise in vaping among teens.

Altria invested $12.8 billion in Juul in December 2018 in an attempt to expand sales beyond traditional cigarettes as smoking rates decline, according to a CNBC report .

CEO outlook: "Despite the unexpected challenges related to our investment in JUUL, which led to impairment charges and reported losses, we made significant progress advancing and building our noncombustible business platform with the launch of IQOS and completion of the on! transaction".

The impairment charges sent GAAP earnings into negative territory. It retracted an original agreement to support Juul's marketing and distribution, and reworked Juul's board to include Altria representatives.

In its fourth-quarter, Altria posted a net loss of $1.81 billion, or $1.00 a share, compared with net income of $1.25 billion, or 66 cents a share, a year ago.

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Under the new agreement, Altria will continue to provide assistance to Juul on regulatory affairs services, but will by the end of March 2020 "discontinue" other services.

The new agreement also allows Altria to develop its own vaping products if Juul is prohibited from selling e-cigarettes in the U.S. for at least a year.

A major investor in leading e-cigarette-maker Juul has seen its stake in the company drop by more than two-thirds.

Until the Federal Trade Commission's review is complete, Altria can't convert its nonvoting shares to voting shares, appoint representatives to Juul's board or count Juul's earnings toward its own earnings. Altria said it has $500 million remaining in its current buyback program and it expects to run that to zero by the end of this year.

Altria's loss in the fourth quarter was reported at $1.81 billion that translates to $1 per share.

Altria Group Inc. now expects no earnings contributions from Juul through 2022, and it's lowering its adjusted earnings growth forecast for 2020 through 2022 to between 4% and 7%. The stock's 52-week range is $39.30 to $57.88.

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