Altria provided investors with some updated financial guidance in the announcement. It warned that its full-year adjusted earnings per share will be slightly below the low end of its long-term 7 to 9 percent adjusted earnings because of the debt it’s incurred from its investments in Juul and Canadian cannabis company Cronos.
Altria invested took a 45 percent stake in Cronos for $1.8 billion. Both investments comes as cigarette sales fall at a faster clip than anticipated, threatening Altria’s usual tactic of raising prices to offset sales declines.
Some analysts have speculated whether its investment in Juul changes Altria’s relationship with Philip Morris International, the company it spun off in 2008. The two have an agreement for Altria to commercialize PMI’s new heated tobacco product, IQOS, in the U.S. if the FDA clears it. And PMI currently sells Altria’s e-cigarette brands internationally.
Since the separation, Altria has operated largely in the U.S., while PMI has focused overseas, meaning the two companies haven’t directly competed. Juul’s products are already sold in eight markets overseas.
PMI CEO Andre Calantzopoulos said the deal with Juul doesn’t change Altria’s agreement to sell IQOS products should it receive FDA approval.
“Any development that genuinely results in more choices becoming available for the more than 1 billion men and women who smoke today and moves the world closer to eliminating the cigarette should be applauded,” he said.
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