Altria reported a loss on Thursday as it generated $4.1 billion in impairment payments on its investment in e-cigarette company Juul. Only three months ago, Altria wrote down its stake in Juul by $4.5 billion. The company is now valuing the e-cigarette maker at about $12 billion, well below the $38 billion it will value when Altria invests in 2018.
The Richmond, Va.-based cigarette maker said this was mainly due to an increase in the number of pending legal cases against Juul, which is expected to rise further.
For the full year 2019, Its investment in Juul generated $8.6 billion in non-cash pre-tax impairment expenses, and its stake in Juul was valued at $4.2 billion as of December 31, 2019, according to Altria.
Altria said Thursday that it expects adjusted u.S. cigarette sales to fall 4 to 6 percent in 2020.
Faced with an accelerated decline in cigarette sales, Altria bought a 35 percent stake in Juul in 2018 for $12.8 billion in cash, seeking growth beyond traditional cigarettes. The deal makes Juul one of Silicon Valley’s most valuable start-ups.
Since then, Juul has been hit by lawsuits, product bans and market investigations. India, Thailand and China have imposed varying degrees of bans on e-cigarette products. As concerns about the safety of e-cigarettes grow, there is growing evidence that the use of e-cigarettes among teenagers is on the rise.