PM USA's Volumes Hit by Federal Tax Hike

Source from:  Tobacco Reporter 04/24/2009

PM USA's domestic cigarette shipment volume during the first quarter of 2009, at 34.4 billion, was 14.2 per cent lower than its volume during the first quarter of 2008. But volume was estimated to be down 5.7 per cent when adjusted for changes in trade inventories and calendar differences, largely accounted for by destocking ahead of a huge federal tobacco excise increase on April 1. Total cigarette industry volume was said to be down by an estimated 5 per cent in the first quarter of 2009 when adjusted for trade inventory changes and calendar differences. Marlboro's volume fell by 12.4 per cent to 29.1 billion, while Basic was down by 22.0 per cent to 2.4 billion, Virginia Slims was down by 17.6 per cent to 1.2 billion and Parliament was down by 34.7 per cent to 0.9 billion. Marlboro's share rose 0.5 points to take 42.4 per cent of the market, but it was the only one of PM USA's Focus Brands to show an increase. In total, the company's Focus Brands dropped 0.2 points to 49.6 per cent, while, overall, PM USA's share fell by 0.3 per cent to 50.9 per cent. The Altria Group has revised its reporting segments as a result of its acquisition of UST. Beginning in the first quarter of 2009, Altria's reporting segments are Cigarettes, manufactured by PM USA; Smokeless Products, manufactured by USSTC [UST] and PM USA; Cigars, manufactured by John Middleton Co; Wine, produced by SMWE; and Financial Services, provided by Philip Morris Capital Corporation (PMCC). In reporting its first quarter 2009 results, Altria said volume sales of moist smokeless tobacco were down by 5.3 per cent to 151.5 million cans. Skoal sales fell by 6.5 per cent to 61.5 million cans while sales of Copenhagen dropped by 6.9 per cent to 63.8 million cans. Total cigar sales increased by 10.4 per cent to 345 million. Overall, Altria announced 2009 first-quarter reported diluted earnings per share (EPS) from continuing operations of $0.28, down by 3.4 per cent on those of the first quarter of 2008. Reported results were said to have been impacted by higher interest expense, charges related to the acquisition of UST Inc, and lower SABMiller equity earnings. These factors were partially offset by higher operating companies' income (OCI) from cigarettes, cigars and financial services, as well as the OCI contribution from the UST acquisition, and lower general corporate expenses. Altria's adjusted 2009 first-quarter diluted EPS from continuing operations increased by 5.4 per cent to $0.39. "Altria delivered solid business results in the first quarter in a challenging economic environment," said Michael E. Szymanczyk, chairman and CEO. "Our cigarette business performed particularly well in the quarter, with strong adjusted operating companies' income growth and Marlboro retail share gains. "We are also pleased to have completed the UST acquisition, and the integration is proceeding very well. USSTC has already taken a number of important steps to enhance the value equation on its leading premium brands. In the southeast region, USSTC's premium retail share has responded well to our investment spending and has stabilized." Enditem