Altria Group 2Q Profit up, Co. Boosts Forecast

In this May 27, 2009 photo, a store employee arranges cartons of Marlboro cigarettes, an Altria...

In this May 27, 2009 photo, a store employee arranges cartons of Marlboro cigarettes, an Altria brand, at a Costco store in Mountain View, Calif. Altria Group Inc., owner of Philip Morris USA, said Wednesday, July 22, 2009, that its second-quarter profit rose 9 percent partly on lower corporate expenses, an acquisition and improved cigarette sales.(AP Photo/Paul Sakuma)

(AP)

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 lost 3 cents to close at $17.30 Wednesday.

"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.