PM USA's 3Q Cigarette Volume Tumbles

Source from:  Tobacco Reporter 10/23/2009

PM USA's third quarter domestic cigarette shipment volume, at 37.5 billion, was 16.4 per cent lower than that of the third quarter of 2008, but was estimated to be down by about 12 per cent when adjusted for changes in trade inventories, according to Altria's third quarter report. Third-quarter volume was said to have been negatively impacted by a [substantial] federal excise tax increase earlier this year, a decline in trade inventories, and changes to the company's pricing and promotional strategies. Total cigarette industry volume was down an estimated 10 per cent when adjusted for trade inventory changes. (In the third quarter of 2008, the trade increased cigarette inventories, while in the third quarter of 2009, the trade reduced inventory levels substantially.) Marlboro's cigarette shipment volume was down by 15 per cent in the third quarter of 2009, but was estimated to be down by about 10 per cent when adjusted for trade inventory changes, which were said to have impacted the brand disproportionally. For the first nine months of 2009, PM USA's domestic cigarette shipment volume of 112.5 billion units was 12.5 per cent lower than that of the first nine months of the previous year, but was estimated to be down by about 10 per cent when adjusted for changes in trade inventories and calendar differences. Total cigarette industry volume for the two nine-month periods was down an estimated eight per cent when adjusted for trade inventory changes and calendar differences. PM USA's retail share of the US cigarette market during the third quarter of this year, at 49.7 per cent, was down from 50.6 per cent during the third quarter of 2008; and its share during the first nine months of 2009, at 50.1 per cent, was down from 50.9 per cent during the first nine months of last year. But Marlboro's retail shares for the third quarter of 2009 and the first nine months of 2009 each increased by 0.1 of a share point to 41.9 per cent. Meanwhile, USSTC's and PM USA's combined smokeless products domestic shipment volume for the third quarter of 2009 and the first nine months of 2009 declined 4.5 per cent and 4.3 per cent respectively versus those of the prior-year periods, but management is said to estimate the long-term growth rate for smokeless products industry volume remains at seven per cent. Middleton's third-quarter 2009 cigar volume, at 341 million, was up by 3.9 per cent on that of the third quarter of last year, but for the first nine months of this year the company's cigar shipment volume, at 956 million, was down by 3.9 per cent on that of the first nine months of 2008. For the third quarter of 2009, Altria's net revenues increased by 20.3 per cent to $6.3 billion, operating income increased by 4.9 per cent to $1.4 billion, and net earnings attributable to Altria increased by 1.7 per cent to $0.9 billion. For the first nine months of 2009, Altria's net revenues increased by 19.3 per cent to $17.5 billion, operating income increased by 9.7 per cent to $4.3 billion, and net earnings attributable to Altria, which includes Philip Morris International as a discontinued operation in 2008, decreased by 41.6 per cent to $2.5 billion. Chris Burritt, reporting for Bloomberg, said that Altria's third quarter profit had been helped by its acquisition of UST Inc in January and higher cigar prices. "Earnings from snuff brands Copenhagen and Skoal, as well as Black & Mild cigars, countered a 16 per cent decline in cigarette shipments after the US government increased taxes earlier this year," Burritt wrote. "Michael Szymanczyk, Altria's chairman and chief executive officer, cut jobs and other expenses to trim costs by $76 million in the quarter." Enditem