Altria Group, Inc. (NYSE:MO) is one of the world's leaders in the manufacturing of tobacco products. Facing a natural decrease in demand as healthy lifestyles become more fashionable, the company needs to increase its business diversification. The main questions to consider for mid- and long-term investors are:
- Is the company able to offset a decline in volumes with price increases?
- Are there any significant positive developments in the product line?
- Are any M&A activities being undertaken to support margins?
Even though tobacco products consumption is decreasing, especially among youth, MO manages to compensate for the drop in the volume of sales by increasing selling prices. Namely, a 2.6% decline in the volume of smokeable products sales in Q1 2017 was more than offset by price growth so that net revenues from this product segment grew by 0.7% YoY.
