Tobacco giant Altria (NYSE:MO) wrote down its $12.8-billion investment in troubled e-cigarette maker Juul by more than a third, recording a $4.5-billion pre-tax charge against its third-quarter earnings.
The company took pains to make clear that there wasn’t a single event or factor that led to the writedown, citing the Trump administration’s plans to remove flavored e-cigarettes from the market as well as e-cigarette bans across cities and states in the U.S. and several countries overseas.
Altria’s $12.8-billion investment bought a 35% stake in Juul late last year, valuing the e-cigarette start-up at $38 billion. The deal is still awaiting regulatory approval. Altria said it expects a decision from the Federal Trade Commission in the first quarter of next year.
The writedown drove the company’s net income down by about $2.41 a share. On an unadjusted basis, Altria booked a $2.6-billion loss for the quarter, or $1.39 a share, compared with a profit of $1.94 billion, or $1.03 a share, during the same time last year.
On an adjusted basis, which backs out one-time charges like the Juul write-down, the company’s earnings for the three months ended Sept. 30 of $1.19 per share beat Wall Street estimates of $1.15 a share.
Earnings per share registered at an adjusted $1.19, compared to an expected figure of $1.15. Revenue came in at $5.41 billion vs. $5.34 billion expected
In the nearly year since announcing the deal, Juul has been embroiled in controversy. The company is largely blamed for fueling an epidemic of teen vaping.
Shares took on 80 cents, or 1.7%, to $46.76 Thursday morning.
