Altria Group profit, revenue climb in 2nd quarter
AP
Altria lowered its general corporate expenses to $50 million from $73 million during the quarter.
Published: July 22, 2009
Updated: July 22, 2009
Even though Americans bought fewer cigarettes in the second quarter, profit rose 9 percent at Altria Group Inc., owner of the nation’s biggest cigarette maker, Philip Morris USA, as the company cut costs and integrated a recently acquired smokeless tobacco maker.
The Richmond, Va.-based seller of Marlboro cigarettes and Black & Mild cigars raised its full-year forecast as it reported its earnings Wednesday.
Altria earned $1.01 billion, or 49 cents per share, for the period that ended June 30, compared with $930 million, or 45 cents per share, in the same quarter a year ago. Excluding exit costs related to plant closings and other items, adjusted earnings were 50 cents per share.
Analysts polled by Thomson Reuters, whose estimates normally exclude one-time items, forecast profit of 47 cents per share.
Revenue grew 33 percent to $6.72 billion from $5.05 billion largely on higher prices that included the 62-cent-per-pack federal excise tax increase that went into effect April 1. Altria also credited its January acquisition of smokeless tobacco company UST Inc., which makes Copenhagen and Skoal.
The company’s revenue topped Wall Street’s estimate of $5.35 billion. Its shares rose 6 cents to $17.39 in morning trading.
“Our tobacco businesses continued performing well in what I describe as a challenging environment,“ Chief Executive Michael E. Szymanczyk said in a conference call with investors.
Excluding excise taxes, cigarette sales decreased 2.1 percent to $4 billion on lower volume on all Philip Morris USA brands, including Marlboro, Parliament, Virginia Slims and Basic. Marlboro, the best-selling brand in the U.S., lost 0.6 points of market share to end up with 41.2 percent of the U.S. market, according to data from Information Resources Inc.
Volumes had dropped industrywide during the first quarter as retailers and wholesalers cut their orders ahead of a one-time federal “floor” tax on their inventory. Altria said retailers rebuilt their inventories during the second quarter but not back to previous levels.
Sales of cigars — which weren’t covered by the floor tax and rose last quarter — decreased 12.9 percent to $74 million in the second quarter compared with a year earlier, excluding excise taxes.
Like other U.S. tobacco companies, Altria is focusing on cigarette alternatives for sales growth because domestic cigarette consumption is falling 3 percent to 4 percent a year. The company’s smokeless tobacco volume declined 3.4 percent during the quarter, but it expects long-term growth in segment of 6 percent or more.
Altria said it cut costs about $25 million in the second quarter and expects to save about $695 million more by 2011.
The company also said its previously announced plan to cease production at its Cabarrus County, N.C., cigarette factory by the end of this month will deliver annual cost savings of $188 million by 2011 and help bring its manufacturing capacity in line with declines in U.S. cigarette volume.
The company lifted its full-year outlook for adjusted earnings from continuing operations to a range of $1.72 to $1.77 per share. Previously, the company predicted earnings of $1.70 to $1.75 per share. It expects to incur pretax charges of about $175 million in the second half of 2009 primarily related to closing the Cabarrus County plant.
Analysts expect full-year profit of $1.71 per share.
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AP Business Writer Michelle Chapman contributed to this story from New York.
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Reader Reactions
onuser, I agree. Philip Morris never really cared about their employees but they didn’t rub their faces in it everyday like they do now. If they ever wonder what has happened to the work ethic, then they should look in the mirror. When you treat people good, they will bust their butts for you, when you treat them like crap, they will NOT go above and beyond and even screw over you when they get a chance.
Productivity is nothing like it used to be. People just don’t care anymore. Like what is the point? You bust your butt for them and they will take away from you every chance they get. There is no record of anything you ever accomplish for them anyway, but they keep a record of every little thing they can use against you. They have the reward/punishment system all screwed up. At least it is that way for hourly workers.
Management has lost over 1/2 the volume since the MSA but they constantly pat themselves on the back. They are running it in the ground and don’t even realize it. Management is so far out of touch it isn’t even funny. They give you nothing to work with and expect you to produce.
This company has seen its best days. So sad, it used to be one of the best companies to work for, now they are just like all the rest. To lay someone off with 27 or 28 years of service is just plain wrong. You work all of your life, play by their rules, and they pull the rug out from under you when you get to the end of your career. They will have to answer to someone, someday.
Whitty1, What are you referring to? Philip Morris quit caring about their employees when they had to make a master tobacco settlement.
Sad how the rich keep getting richer on the backs of their long term employees. They are laying off employees with 27 and 28 years of service with no chance of a transfer or no retirement package. This company has always done the right thing by their long term employees until now. These days, it is all about lining the pockets of a few execs.
Of course the President should set a good example just as you , i and millions of others .Why single the President out for this article is beyond me , i don’t smoke, i set that example at home , i teach and preach to my child about whats right and wrong .Raising a child starts at home , role models should start at home .
fedup will not be thrilled about this article.
Mr. M.. Are you saying that our president should not set a good example? I mean after all, he does have two impressionable children himself.
Children do not grow up in the vacuum of their family unit.. remember Hilary going on about the village raising the child? Children are going to look to their parents and other prominent people as examples of how to or not to live their lives.
Smoking wreaks a high toll both in loss of life and in financial terms to the country. The fact that the president still indulges in this vice should be a concern to the American public.
I smoked when I was younger, but did quit when I got over the whole “I’m young and invicible” stage of my life.. Just mentioning that to show that I am not unfeeling as to the issues that surround quitting a habit. He is old enough to know better and he should be setting a better example, if only for his own children.
Good Parents ,parenting skills will be a childs example , if your child is looking to mock another by smoking you’re not doing your job .
In hard economic times, people tend to smoke more.
Plus, we have a smoker in the White House setting an example to all children out there how cool smoking really is.
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