Altria (MO) had its investor day in NY to discuss it upcoming spin.
Shareholders as of March 19 will receive 1 share of Phillip Morris International for each Altria share they hold on March 28, the spin date.
Guidance:
Altria (MO):
* 2008 full-year diluted earnings per share from continuing operations are projected to grow approximately 9% to 11% from an adjusted base of $1.50, excluding PMI.
* Long term total annual shareholder return of over 12% when combined with the dividend
* EPS growth in the range of 8% to 10%
* An anticipated dividend payout ratio of 75%, with an initial post-spin annualized dividend rate of $1.16 per share;
* A planned share repurchase program of $7.5 billion over the next two years, which will commence in April of this year;
* Approximately $1.0 billion in cumulative annual cost savings, $300 million of which were realized in 2007 and approximately $700 million in additional savings to be realized by the end of 2011.
* Tests in both smokeless and snus are going “very well”
Phillip Morris International (PM):
* Full-year diluted EPS from continuing operations are projected to grow 12% to 14% from a 2007 pro-forma adjusted base of $2.78.
* Long term revenue growth, net of excise taxes, of 4% to 6%; shipment volume growth of 1% to 2%; operating income growth of 6% to 8%; earnings per share growth in the range of 10% to 12%
* Dividend policy anticipates a pay-out ratio of 65%. The initial annual dividend rate has been set at $1.85 per share.
* A share repurchase program of $13 billion over two years.
* Expect to return approximately $21 billion to shareholders over the next 2 years.
* $1.0 billion in cumulative annual cost savings by the end of 2010; and a cumulative total cash flow of approximately $22 billion by the end of 2010.
Why is the cig biz so good? Altria’s cost to produce 1000 cigarettes is $16.40. Talk about profit margin? This is 16% to 21% lower than the competition.
I own Altria and plan to hold both for the foreseeable future…
Disclosure (“none” means no position):Long MO, Long PM (post spin)
