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Altria invests in cannabis companies as cigarette sales decline

Altria reported on Thursday, Jan 31, the results of their fourth-quarter (Q4) business result that matched analyst expectations.

Despite Altria leaving the flavored e-cigarette industry, the company still closed out 2018 with excellent full-year adjusted diluted EPS growth, and they continued to reward shareholders by returning $5.4 billion in cash dividends, Altria’s Chairman and Chief Executive Officer, Howard Willard said.

Philip Morris USA, one of Altria’s companies, stabilized Marlboro and strengthened their combustibility. They also took proactive steps, which they believe, that uniquely positions the company for long-term success.

Altria enters 2019 with an evolved business platform that includes their strong core tobacco businesses and new strategic investments with the tremendous potential for growth, Willard further added.

The result also gave investors more insight on its new e-cigarette and marijuana investments as its core cigarette business shrinks. Altria expects to maintain a dividend payout ratio target of approximately 80% of adjusted diluted EPS.

In December 2018, Altria announced a cost reduction program that it expects will deliver approximately $575 million in annualized cost savings by the end of 2019 (Cost Reduction Program). The program includes third-party spending reductions across the business and workforce reductions. Altria recorded pre-tax charges of $121 million in the fourth quarter of 2018 related to the program.

As of December 31, 2018, the company had approximately $345 million remaining in the current $2 billion share repurchase program, which Altria expects completely by the end of the second quarter of 2019.

Altria continued to invest in the smoking alternative JUUL, as well as Cronos, the company focused on providing patients with compassionate care. The two companies, according to Altria, gives them exposure to new growth opportunities, while also further diversifying their future income streams.