Analysis of Profitability Ratios
Profitability ratios measure the company ability to generate profitable sales from its resources (assets).
Profitability Ratios (Summary)
Return on Sales
Return on Investment
Altria Group Inc., profitability ratios
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
The profitability profile exhibits a consistent upward trajectory from 2019 through 2023, characterized by expanding margins and a significant recovery in bottom-line returns. After a period of instability in 2019, the company demonstrated a sustained ability to increase its profit capture across all levels of the income statement.
- Gross Profit Margin
- A steady expansion is observed, with the margin rising from 50.62% in 2019 to 58.34% by 2023. Aside from a marginal dip in 2020, the trend reflects a consistent improvement in production efficiency or pricing power over the five-year period.
- Operating Profit Margin
- Operating efficiency improved steadily, moving from 41.12% in 2019 to a peak of 47.49% in 2022, before slightly moderating to 47.16% in 2023. This indicates a strong capacity to control operational expenses relative to revenue growth.
- Net Profit Margin
- The net margin displays the highest degree of volatility, starting at -5.15% in 2019 and reaching 33.21% by 2023. This sharp recovery, despite a dip in 2021, suggests a significant turnaround in net earnings and a substantial reduction in the impact of non-operating losses or expenses.
- Return on Assets (ROA)
- ROA followed a recovery pattern similar to the net profit margin, transitioning from a negative -2.62% in 2019 to a robust 21.08% in 2023. This trend signifies a marked increase in the efficiency with which assets are utilized to generate earnings.
- Return on Equity (ROE)
- ROE showed extreme fluctuation in the available data, shifting from -20.78% in 2019 to 157.34% in 2020. The absence of data for subsequent years precludes a long-term trend analysis, but the initial swing indicates high sensitivity to changes in net income or equity structure.
In summary, the financial data indicates a strong shift toward higher profitability. The simultaneous rise in gross, operating, and net margins suggests that profitability gains are driven by both cost management and overall operational improvements, leading to significantly enhanced returns on assets.
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Gross Profit Margin
Altria Group Inc., gross profit margin calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Gross profit | 14,284) | 14,246) | 13,992) | 13,023) | 12,711) | |
| Net revenues | 24,483) | 25,096) | 26,013) | 26,153) | 25,110) | |
| Profitability Ratio | ||||||
| Gross profit margin1 | 58.34% | 56.77% | 53.79% | 49.80% | 50.62% | |
| Benchmarks | ||||||
| Gross Profit Margin, Competitors2 | ||||||
| Coca-Cola Co. | 59.52% | 58.14% | 60.27% | — | — | |
| Mondelēz International Inc. | 38.22% | 35.92% | 39.19% | — | — | |
| PepsiCo Inc. | 54.21% | 53.03% | 53.35% | — | — | |
| Philip Morris International Inc. | 63.35% | 64.10% | 68.06% | — | — | |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 2023 Calculation
Gross profit margin = 100 × Gross profit ÷ Net revenues
= 100 × 14,284 ÷ 24,483 = 58.34%
2 Click competitor name to see calculations.
The period between 2019 and 2023 is characterized by a notable divergence between net revenue trajectories and gross profitability. Despite a general decline in net revenues following a peak in 2020, gross profit has exhibited consistent growth, resulting in a substantial expansion of the gross profit margin.
- Net Revenue Trends
- An initial increase was observed between 2019 and 2020, with revenues reaching 26,153 million US dollars. However, a subsequent downward trend occurred over the following three years, with net revenues contracting to 24,483 million US dollars by December 31, 2023.
- Gross Profit Performance
- A steady upward trajectory is evident in gross profit, which increased from 12,711 million US dollars in 2019 to 14,284 million US dollars in 2023. This growth persisted consistently, independent of the fluctuations and eventual decline in net revenues.
- Gross Profit Margin Expansion
- Following a slight contraction to 49.80% in 2020, the gross profit margin entered a phase of sustained acceleration. The margin climbed to 53.79% in 2021, 56.77% in 2022, and reached 58.34% by the end of 2023, marking a significant increase in overall profitability per dollar of revenue.
The ability to increase absolute gross profit while net revenues decreased suggests a significant optimization of the cost of goods sold or a strategic shift toward a more profitable product mix. This trend indicates strengthened pricing power and improved operational efficiency in managing production costs.
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Operating Profit Margin
Altria Group Inc., operating profit margin calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Operating income | 11,547) | 11,919) | 11,560) | 10,873) | 10,326) | |
| Net revenues | 24,483) | 25,096) | 26,013) | 26,153) | 25,110) | |
| Profitability Ratio | ||||||
| Operating profit margin1 | 47.16% | 47.49% | 44.44% | 41.57% | 41.12% | |
| Benchmarks | ||||||
| Operating Profit Margin, Competitors2 | ||||||
| Coca-Cola Co. | 24.72% | 25.37% | 26.67% | — | — | |
| Mondelēz International Inc. | 15.28% | 11.22% | 16.20% | — | — | |
| PepsiCo Inc. | 13.10% | 13.33% | 14.04% | — | — | |
| Philip Morris International Inc. | 32.85% | 38.56% | 41.32% | — | — | |
| Operating Profit Margin, Sector | ||||||
| Food, Beverage & Tobacco | 19.36% | 19.83% | 21.93% | — | — | |
| Operating Profit Margin, Industry | ||||||
| Consumer Staples | 7.31% | 8.44% | 8.48% | — | — | |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 2023 Calculation
Operating profit margin = 100 × Operating income ÷ Net revenues
= 100 × 11,547 ÷ 24,483 = 47.16%
2 Click competitor name to see calculations.
An analysis of the operational performance from 2019 to 2023 reveals a divergence between revenue trajectories and profitability margins. While net revenues have faced a decline in recent years, the operating profit margin has expanded, indicating enhanced operational efficiency or strategic pricing adjustments.
- Net Revenue Trends
- Net revenues peaked in 2020 at 26,153 million US$ before entering a consistent downward trajectory, falling to 24,483 million US$ by December 31, 2023. This represents a contraction in top-line performance over the latter half of the analyzed period.
- Operating Income Performance
- Operating income demonstrated growth for the majority of the period, rising from 10,326 million US$ in 2019 to a peak of 11,919 million US$ in 2022. A slight contraction occurred in 2023, with income settling at 11,547 million US$.
- Operating Profit Margin Evolution
- The operating profit margin exhibited a consistent upward trend from 2019 to 2022, increasing from 41.12% to a peak of 47.49%. Despite a marginal decline to 47.16% in 2023, the margin remains significantly elevated compared to the 2019 baseline. The expansion of this margin, occurring simultaneously with declining net revenues between 2020 and 2023, suggests a successful optimization of operating costs or a shift toward higher-margin revenue streams.
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Net Profit Margin
Altria Group Inc., net profit margin calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net earnings (losses) attributable to Altria | 8,130) | 5,764) | 2,475) | 4,467) | (1,293) | |
| Net revenues | 24,483) | 25,096) | 26,013) | 26,153) | 25,110) | |
| Profitability Ratio | ||||||
| Net profit margin1 | 33.21% | 22.97% | 9.51% | 17.08% | -5.15% | |
| Benchmarks | ||||||
| Net Profit Margin, Competitors2 | ||||||
| Coca-Cola Co. | 23.42% | 22.19% | 25.28% | — | — | |
| Mondelēz International Inc. | 13.77% | 8.63% | 14.97% | — | — | |
| PepsiCo Inc. | 9.92% | 10.31% | 9.59% | — | — | |
| Philip Morris International Inc. | 22.21% | 28.49% | 29.00% | — | — | |
| Net Profit Margin, Sector | ||||||
| Food, Beverage & Tobacco | 15.62% | 15.68% | 17.28% | — | — | |
| Net Profit Margin, Industry | ||||||
| Consumer Staples | 5.47% | 6.11% | 6.21% | — | — | |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 2023 Calculation
Net profit margin = 100 × Net earnings (losses) attributable to Altria ÷ Net revenues
= 100 × 8,130 ÷ 24,483 = 33.21%
2 Click competitor name to see calculations.
The financial performance from 2019 through 2023 is characterized by a substantial recovery in profitability and a significant expansion of margins, occurring alongside a gradual contraction in net revenues.
- Net Profit Margin Analysis
- The net profit margin exhibited significant volatility, starting at -5.15% in 2019. After an initial recovery to 17.08% in 2020, the margin dipped to 9.51% in 2021. However, a strong upward trajectory followed, with the margin increasing to 22.97% in 2022 and reaching 33.21% by 2023. This trend represents a consistent and aggressive increase in the percentage of revenue converted into net profit over the final three years of the period.
- Revenue and Earnings Divergence
- A notable divergence is observed between top-line revenue and bottom-line earnings. Between 2020 and 2023, net revenues decreased from 26,153 million US dollars to 24,483 million US dollars. Conversely, net earnings attributable to the company rose from 4,467 million US dollars in 2020 to 8,130 million US dollars in 2023. This indicates that the growth in net earnings was not driven by sales expansion, but rather by improved operational efficiency, cost reductions, or favorable pricing strategies.
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Return on Equity (ROE)
Altria Group Inc., ROE calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net earnings (losses) attributable to Altria | 8,130) | 5,764) | 2,475) | 4,467) | (1,293) | |
| Stockholders’ equity (deficit) attributable to Altria | (3,540) | (3,973) | (1,606) | 2,839) | 6,222) | |
| Profitability Ratio | ||||||
| ROE1 | — | — | — | 157.34% | -20.78% | |
| Benchmarks | ||||||
| ROE, Competitors2 | ||||||
| Coca-Cola Co. | 41.30% | 39.59% | 42.48% | — | — | |
| Mondelēz International Inc. | 17.50% | 10.11% | 15.21% | — | — | |
| PepsiCo Inc. | 49.04% | 51.96% | 47.48% | — | — | |
| Philip Morris International Inc. | — | — | — | — | — | |
| ROE, Sector | ||||||
| Food, Beverage & Tobacco | 52.90% | 51.06% | 53.84% | — | — | |
| ROE, Industry | ||||||
| Consumer Staples | 30.71% | 32.10% | 31.40% | — | — | |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 2023 Calculation
ROE = 100 × Net earnings (losses) attributable to Altria ÷ Stockholders’ equity (deficit) attributable to Altria
= 100 × 8,130 ÷ -3,540 = —
2 Click competitor name to see calculations.
The financial performance from 2019 to 2023 is characterized by a significant divergence between net earnings growth and the stability of stockholders' equity. While the company successfully transitioned from a net loss in 2019 to consistent and increasing profitability through 2023, the equity base underwent a severe contraction, resulting in a persistent deficit starting in 2021.
- Net Earnings Trend
- A strong recovery is observed in net earnings, which shifted from a loss of $1,293 million in 2019 to a profit of $4,467 million in 2020. Following a temporary decline to $2,475 million in 2021, earnings demonstrated a steep upward trajectory, reaching $5,764 million in 2022 and peaking at $8,130 million by the end of 2023.
- Stockholders' Equity Position
- Stockholders' equity experienced a continuous and substantial decline over the five-year period. From a positive position of $6,222 million in 2019, equity dropped to $2,839 million in 2020 and entered a deficit state in 2021 with a balance of -$1,606 million. This deficit widened to -$3,973 million in 2022 before seeing a marginal improvement to -$3,540 million in 2023.
- Return on Equity (ROE) Interpretation
- The ROE exhibited extreme volatility during the initial period, moving from -20.78% in 2019 to 157.34% in 2020. For the years 2021, 2022, and 2023, ROE values are not provided. This absence is analytically consistent with the emergence of negative stockholders' equity; when equity becomes a deficit, the standard ROE calculation produces a mathematically negative result despite positive net earnings, rendering the ratio an unreliable metric for assessing operational profitability and management efficiency.
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Return on Assets (ROA)
Altria Group Inc., ROA calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net earnings (losses) attributable to Altria | 8,130) | 5,764) | 2,475) | 4,467) | (1,293) | |
| Total assets | 38,570) | 36,954) | 39,523) | 47,414) | 49,271) | |
| Profitability Ratio | ||||||
| ROA1 | 21.08% | 15.60% | 6.26% | 9.42% | -2.62% | |
| Benchmarks | ||||||
| ROA, Competitors2 | ||||||
| Coca-Cola Co. | 10.97% | 10.29% | 10.36% | — | — | |
| Mondelēz International Inc. | 6.95% | 3.82% | 6.41% | — | — | |
| PepsiCo Inc. | 9.03% | 9.67% | 8.25% | — | — | |
| Philip Morris International Inc. | 11.96% | 14.67% | 22.06% | — | — | |
| ROA, Sector | ||||||
| Food, Beverage & Tobacco | 9.72% | 9.51% | 10.44% | — | — | |
| ROA, Industry | ||||||
| Consumer Staples | 8.28% | 8.95% | 8.75% | — | — | |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 2023 Calculation
ROA = 100 × Net earnings (losses) attributable to Altria ÷ Total assets
= 100 × 8,130 ÷ 38,570 = 21.08%
2 Click competitor name to see calculations.
The financial performance from 2019 to 2023 reveals a significant recovery and subsequent expansion in profitability and asset efficiency. A marked transition is observed, moving from a period of negative returns to a state of high capital productivity.
- Net Earnings Trajectory
- Net earnings exhibited substantial volatility with an overall upward trend. After a net loss of US$ 1,293 million in 2019, earnings shifted to a positive US$ 4,467 million in 2020. Despite a temporary decline to US$ 2,475 million in 2021, a strong growth phase followed, with earnings ascending to US$ 5,764 million in 2022 and peaking at US$ 8,130 million in 2023.
- Total Asset Dynamics
- A general contraction in the asset base was observed between 2019 and 2022, as total assets decreased from US$ 49,271 million to US$ 36,954 million. This downward trend suggests a period of asset optimization or divestiture. A slight reversal occurred in 2023, with assets increasing to US$ 38,570 million.
- Return on Assets (ROA) Analysis
- The ROA demonstrates a powerful upward trend, increasing from -2.62% in 2019 to 21.08% in 2023. This improvement is the result of a compounding effect: rising net earnings coupled with a leaner asset base. The most significant acceleration in efficiency occurred after 2021, where the ratio more than tripled over a two-year period, indicating a substantial increase in the company's ability to generate profit from its resources.
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