Altria Gains on Smokeless Volumes as Cigarettes Slide

Source from:  Tobacco Reporter 07/23/2010

Philip Morris USA's volume cigarette sales during the three months to the end of June, at 36.5 billion, were down by 10.2 per cent on those of the three months to the end of June 2009. Marlboro volumes fell by 9.4 per cent to 31.3 billion, sales of other premium brands fell by 17.7 per cent to 2.7 billion and sales of discount brands fell 11.4 per cent to 2.5 billion. However, PM USA's cigarette market share was up by 0.7 of a percentage point to 50.2 per cent, driven by a 1.6 percentage point increase by Marlboro, which took it to 42.8 per cent. Meanwhile, PM USA's volume sales during the six months to the end of June, at 70.6 billion, were down by 5.9 per cent on those of the six months to the end of June 2009. Marlboro volumes were down by 4.4 per cent to 60.9 per cent, sales of other premium brands were down by 14.4 per cent to 5.1 billion, while discount volumes fell by 14.1 per cent to 4.6 billion. PM USA's cigarette market share was unchanged at 50.2 per cent, while Marlboro put on 0.8 of a percentage point. During the three months to the end of June, the combined domestic-market volume for smokeless tobacco products, including USSTC and PM USA products, at 181.9 million cans and packs, was up by 9.2 per cent on that of the three months to the end of June 2009. Sales of Copenhagen rose by 12.8 per cent to 80.2 units, sales of Skoal increased by 1.3 per cent to 71.2 million, and sales of Red Seal and other brands rose by 20.8 per cent to 30.5 million. The combined smokeless tobacco retail share of USSTC and PM USA rose by 1.8 percentage points to 56.0 per cent, driven largely by a 2.6 percentage point gain by Copenhagen, which took it to 25.6 per cent. Meanwhile, during the six months to the end of June, the combined domestic-market volume for smokeless tobacco products, at 368.0 cans and packs, was up by 15.3 per cent on that of the six months to the end of June 2009. Sales of Copenhagen rose by 21.6 per cent to 164.0 million units, sales of Skoal increased by 5.4 per cent to 138.9 million, and sales of Red Seal and other brands rose by 23.7 per cent to 65.1 million. The combined smokeless tobacco retail share rose by 0.5 of a percentage point, with Copenhagen putting on 2.3 percentage points. Middleton's volume cigar sales during the three months to the end of June, at 323 million, were increased by 19.7 per cent on those of the three months to the end of June 2009. Sales of Black & Mild cigars were up by 20.3 per cent to 316 million. At the same time, Middleton's market share fell by 2.6 percentage points to 28.3 per cent, with Black & Mild's share down 2.4 percentage points to 27.9 per cent. Meanwhile, during the six months to the end of June, Middleton's cigar sales, at 605 million, were down by 1.6 per cent on those of the six months to the end of June 2009. Sales of Black & Mild were down by 1.1 per cent to 592 million. At the same time, Middleton's market share fell by 1.3 percentage points and Black & Mild's share fell by 1.1 percentage points. During the second quarter of 2010, Altria's net revenues decreased by 6.6 per cent to $6.3 billion, and revenues net of excise taxes decreased by 5.5 per cent to $4.3 billion, due primarily to lower cigarette volume related to trade inventories that were impacted by events surrounding the 2009 federal excise tax (FET) increase on tobacco products. Operating income decreased by 8.8 per cent to $1.5 billion, while net earnings increased by 3.2 per cent to $1.0 billion. During the first six months of 2010, Altria's net revenues increased by 7.0 per cent to $12.0 billion due primarily to higher pricing related to last year's FET increase on tobacco products. Revenues net of excise taxes decreased by 1.4 per cent to $8.3 billion. Operating income increased by 3.2 per cent to $3.0 billion, and net earnings increased by 16.0 per cent to $1.9 billion. "We are very pleased with the performance of Altria and its operating companies through the first half of 2010, as our business results exceeded our expectations coming into the year," said Michael E. Szymanczyk, chairman and CEO of Altria. "Our adjusted 2010 first-half earnings per share grew, driven by solid income growth across our tobacco and wine businesses. Primarily because of our solid first-half performance, Altria is increasing its guidance for its 2010 full-year reported and adjusted diluted earnings per share." Enditem