Altria's Profit Rises 1.7%, Helped by Snuff, Cigars

Source from:  Bloomberg 10/22/2009

Altria Group Inc., the largest U.S. tobacco company, reported third-quarter profit rose 1.7 percent, helped by its acquisition of snuff maker UST Inc. in January and higher prices for cigars. Net income increased to $882 million, or 42 cents a share, from $867 million, or 42 cents, a year earlier, the Richmond, Virginia-based company said today in a statement. Earnings from snuff brands Copenhagen and Skoal, as well as Black & Mild cigars, countered a 16 percent decline in cigarette shipments after the U.S. government increased taxes earlier this year. Michael Szymanczyk, Altria's chairman and chief executive officer, cut jobs and other expenses to trim costs by $76 million in the quarter. "They're wringing costs out of their business and trying to broaden their portfolio with snuff and cigars where there's some growth," said Jack Russo, an Edward Jones & Co. analyst in St. Louis who rates Altria "hold." "The cigarette volume decline is pretty disappointing." Altria fell 45 cents, or 2.4 percent, to $18.21 at 4 p.m. in New York Stock Exchange composite trading. The shares have climbed 21 percent this year before today after tumbling 35 percent in 2008. Cigarette Shipments The company, also the maker of Marlboro and Virginia Slims, narrowed the range of its full-year adjusted earnings forecast to $1.74 to $1.77 a share. Altria had projected $1.72 to $1.77 in July. Analysts anticipate $1.76 on average. Excluding some items, earnings were 48 cents a share for the quarter, beating the 47-cent average of 11 analysts' estimates compiled by Bloomberg. Revenue for the period rose 20 percent to $6.3 billion, boosted by the purchase of UST, the largest U.S. snuff maker. Costs to integrate the purchase, as well as expenses to cut jobs and close a factory, lowered net income. Shipments declined to 37.5 billion cigarettes. Altria raised prices in December, February and March, before taxes rose to 62 cents a pack April 1. The company is the first major tobacco producer to report third-quarter results. Philip Morris International Inc., the world's largest publicly traded tobacco company, and Reynolds American Inc., the second-biggest U.S. producer, plan to report results tomorrow, followed by Lorillard Inc., the third-largest in the U.S., on Oct. 26. Enditem