Altria's Cigarette And Smokeless Volumes Down

Source from:  Tobacco Reporter 04/22/2011

Philip Morris USA's reported domestic cigarette shipment volume during the first quarter of this year, at 31.9 billion, was down by 6.4 per cent on that of the first quarter of 2010. The company's Marlboro volume was down by 5.7 per cent to 27.9 billion, other premium cigarette volume was down by 8.7 per cent to 2.2 billion, and discount cigarette volume was down by 13.5 per cent to 1.8 billion. In reporting its first quarter results yesterday, Altria said that, after adjusting primarily for changes in trade inventories, PM USA's volume was estimated to be down by about five per cent against a total adjusted cigarette category volume that was down by an estimated four per cent. PM USA's retail share of the domestic US market during the first quarter of this year, at 49.0 per cent, was down by 1.2 percentage points on that of the first quarter of 2010. Marlboro's share, at 42.2 per cent, was down by 0.5 of a percentage point, primarily because the timing of first-quarter product launches of Marlboro Special Blend products was more favorable last year than it was this year. The retail share of the company's other premium cigarettes was down by 0.3 of a percentage point to 3.7 per cent, and the share of its discount brands was down by 0.4 of a percentage point to 3.1 per cent. U.S. Smokeless Tobacco Company (USSTC) and PM USA's combined reported domestic smokeless products shipment volume during the first quarter of this year, at 183.7 million cans or packs (packages), was down by 1.3 per cent on that of the first quarter of 2010. Skoal's volume rose by 12.2 per cent to 76.0 million packages, Copenhagen's volume fell by 2.9 per cent to 81.4 million packages, and the volume of other brands fell by 23.8 per cent to 26.3 packages. Once again, product introductions played a part and Altria reported that, after adjusting for these factors, USSTC and PM USA's combined volume was estimated to be up by about six per cent, against a total category growth of about seven per cent. USSTC and PM USA's combined retail share of the domestic smokeless products market during the first quarter of this year, at 54.7 per cent, was down by 0.6 of a percentage point on that of the first quarter of 2010. Copenhagen's share increased by 0.4 of a percentage point to 26.0 per cent, Skoal's share fell by 1.1 percentage points to 22.0 per cent, and the share of the company's other products increased by 0.1 of a percentage point to 6.7 per cent. John Middleton's reported cigar shipment volume during the first quarter of this year, at 287 million pieces, was up by 1.9 per cent on that of the first quarter of 2010. The volume of the company's Black & Mild product increased by 2.5 per cent to 282 million. Middleton's retail share during the first quarter of this year, at 29.1 per cent, was up by 0.6 of a percentage point on that of the first quarter of 2010. Black & Mild's share was up by 0.8 of a percentage point to 28.9 per cent. Altria said that its 2011 first-quarter reported diluted earnings per share were up by 15.4 per cent to $0.45 on those of the first quarter of last year, and that adjusted diluted earnings per share were up by 4.8 per cent to $0.44. Net revenues decreased by 2.0 per cent to $5.6 billion due primarily to lower net revenues from cigarettes and cigars, and revenues net of excise taxes were essentially flat. Operating income increased by 7.6 per cent to $1.5 billion and net earnings attributable to Altria increased by 15.3 per cent to $0.9 billion. In its full year guidance, Altria said that the business environment was likely to remain challenging, as adult consumers remained under economic pressure and faced high unemployment. Altria's tobacco operating companies faced a number of uncertainties in 2011. In the cigarettes segment, PM USA was continuing to see significant competitive activity and remained cautious about the outlook for state excise tax increases. In the smokeless products segment, USSTC had begun executing its plans for Skoal during the first quarter of 2011. And in the cigars segment, Middleton was said to face an especially challenging business environment. "Altria delivered solid financial results in the first quarter as our businesses navigated through high unemployment, low consumer confidence and a competitive business environment," said Michael E. Szymanczyk, chairman and CEO of Altria. "As we anticipated, adjusted EPS [earnings per share] growth comparisons for the first quarter were challenging, but our results exceeded our initial expectations and give us confidence in our belief that we can achieve adjusted diluted EPS growth within our forecasted range for the year." Enditem