While Americans bought fewer cigarettes in the second quarter profit rose 9 percent in Altria Group Inc, the owner of the nation's largest cigarette maker, Philip Morris USA, the company has reduced costs and integrated the recently acquired a kettle of smokeless tobacco.
Richmond, Virginia based seller of Marlboro cigarettes and Black and Mild cigars has increased the forecast year, it reported its earnings environment.
Altria earned $ 1.01 billion, or 49 cents a share, for the period ended June 30, compared with $ 930 million, or 45 cents a share, in the same quarter a year ago. Output excluding costs associated with closing the plant and other items, adjusted earnings were 50 cents per share.
Analysts polled by Thomson Reuters, whose estimates typically exclude one-time items, profit forecast 47 cents per share.
Revenue rose 33 percent to $ 6.72 billion $ 5.05 billion mainly on price increases, which included 62 cents for the Pack to increase the federal excise tax, which came into force on April 1. Altria also credited its January acquisition of smokeless tobacco company inc. UST, which makes Copenhagen and Skoal.
The Company's revenues exceeded Wall Street estimates of $ 5.35 billion. Its shares lost 3 cents to close at $ 17.30 medium.
"Our tobacco companies continued to work well, what I call challenging environment," chief executive Michael E. Szymanczyk said during a conference call with investors.
The exception to the excise tax, cigarette sales declined by 2,1 per cent to $ 4 billion to a lesser extent by all Philip Morris USA brands, including Marlboro, Parliament, Virginia Slims and substantive. 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 Information Resources inc.
The volume of the entire industry declined in the first quarter as retailers and wholesalers to reduce their orders ahead of the one-time federal "tax floor" on their inventory. Altria said its retail stores recovered during the second quarter, but did not return to previous levels.
Selling cigars - which were not covered by the word and tax rose last quarter - 12.9 percent declined to $ 74 million in the second quarter compared with the previous year, excluding excise taxes.
Like other U.S. tobacco companies, Altria is focused on cigarette alternatives for sales growth as domestic cigarette consumption declines 3 percent to 4 percent per year. Smokeless tobacco, including the Company decreased by 3.4 percent during the quarter, but he expects long-term economic growth in the segment 6 or more percent.
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, NC, a cigarette factory by the end of this month, will deliver annual savings of $ 188 million by 2011 and help bring its production capacity in line with the decline in U.S. cigarettes.
The company raised its full year adjusted earnings prospects from continuing operations between $ 1.72 to $ 1.77 per share. Previously, the company predicted earnings of $ 1.70 to $ 1.75 per share. He expects to carry up to paying the fees of about $ 175 million in the second half of 2009 primarily related to the closure of the plant Cabarrus County.
Analysts expect full year earnings of $ 1.71 per share.
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