Altria''s Profit Rises as Smokeless Products Gain Favor

Source from:  Wall Street Journal 10/29/2013

Altria Group Inc. reported its third-quarter core results improved as volume increased for both its smokeable and smokeless products.

Results topped analyst expectations.

Altria, the maker of Marlboro, L&M and other cigarette brands, has been gaining market share in the traditional cigarette business the past several quarters, in part driven by promotions that have lowered the price for some of its products. But tobacco companies face a difficult operating environment as cigarette volumes have been declining for years. A weak economy and high unemployment have continued to pressure consumers' disposable income.

The company's total cigarette sales volume increased 1.2%. Marlboro's shipments were up 1.5%, while discount brands shipments rose 5.1%. Altria's cigarette retail share rose to 50.7% from 50.5%.

The company has benefited from growing interest in smokeless products such as Copenhagen and earlier this year unveiled plans to enter the fast-growing e-cigarette market. Altria's smokeless products saw continued strength as volume increased 9.5%, led by gains for the Copenhagen brand.

Overall, Altria reported a profit of $1.4 billion, or 70 cents a share, up from $657 million, or 32 cents a share, a year earlier.

The latest period included a $145 million gain related to an arbitration panel ruling that determined six of 15 states failed to enforce laws that require escrow payments from cigarette manufacturers that didn't sign the Master Settlement Agreement. Meanwhile, the year-earlier period included a $874 million loss on the early extinguishment of debt.

Excluding special items, adjusted earnings rose to 65 cents from 58 cents.

Revenue, excluding excise taxes, increased 6.6% to $4.76 billion.

Analysts polled by Thomson Reuters most recently projected earnings of 64 cents on revenue of $4.53 billion.

Shares were up 1.7% to $36.99 in premarket trading. Through the close, the stock is up 16% year-to-date. Enditem