Altria Profit Rises 8.6% on Cigarette Price Increases

Source from:  Bloomberg 07/23/2009

Altria Group Inc., the largest U.S. tobacco company, reported second-quarter profit rose 8.6 percent after cigarette price increases, and raised its full-year forecast. Net income advanced to $1.01 billion, or 49 cents a share, from $930 million, or 45 cents, a year earlier, the Richmond, Virginia-based maker of Marlboro cigarettes said today in a statement. Excluding some items, adjusted earnings were 50 cents a share, beating the 47-cent average of analysts' estimates compiled by Bloomberg. Altria's Philip Morris USA raised prices on cigarettes in December, February and March, before the U.S. government boosted taxes by 62 cents a pack April 1. Altria, led by Chairman and Chief Executive Officer Michael Szymanczyk, also plans stop to production in one of its two U.S. cigarette factories July 29, part of $1.5 billion the company expects to save by 2011. "It's a matter of maintaining the existing level of demand," said Peter Jankovskis, who helps manage $1.3 billion, including Altria shares, at Oakbrook Investments in Lisle, Illinois. "They're keeping their costs as low as possible." Altria fell 3 cents to $17.30 at 4 p.m. in New York Stock Exchange composite trading. The shares have advanced 15 percent this year. The company forecast adjusted earnings from continuing operations will be $1.72 to $1.77 a share in 2009, up from a January forecast of $1.70 to $1.75. Profit on that basis was $1.65 in 2008. Snuff Sales Revenue in the second quarter climbed 33 percent to $6.72 billion after Altria acquired UST, the largest U.S. producer of smokeless tobacco, in January, and raised cigarette prices by as much as 81 cents a pack in March. Adjusted profit excluded costs from the integration of UST and gains on the issuance of common stock by brewer SABMiller Plc, based in London. Adjusted earnings were 46 cents in the second quarter of 2008. Marlboro, the top-selling U.S. cigarette, lost market share in the second quarter, falling to 41.2 percent from 41.8 percent a year earlier, as competitors increased promotions to counter higher U.S. taxes, Chief Financial Officer David Beran said on a conference call today. As rivals' promotions eased during the latter part of the quarter, Marlboro's market share recovered and had risen back to 42.4 percent at the end of June, Beran said. Philip Morris USA plans to close its cigarette factory in Cabarrus County, North Carolina, this month. The number of workers has shrunk from 2,500 two years ago through a combination of retirements, transfers to a Richmond factory and job eliminations, David Sylvia, an Altria spokesman, said yesterday in an e-mail. Cost savings totaled $25 million in the second quarter, bringing this year's total to $165 million, Altria said. Pretax charges of $47 million in the quarter and $84 million in the first six months resulted primarily from the factory closing. Enditem