Marlboro maker Altria Group Inc. said Wednesday higher prices, gains in its cigarette, smokeless tobacco and wine business and cost cutting led its first-quarter profit to climb 38 percent.
The owner of nation’s biggest cigarette maker, Philip Morris USA, also reaffirmed its guidance for the year but said the second quarter will be challenging for income growth.
Altria, based in Richmond, Va., said it earned $813 million, or 39 cents per share, compared with $589 million, or 28 cents per share, a year ago.
Excluding one-time items, profit was 42 cents per share. Analysts polled by Thomson Reuters expected adjusted earnings of 40 cents a share.
Revenue excluding excise taxes rose about 2 percent to $3.9 billion. Wall Street expected revenue of $3.84 billion. With taxes, revenue rose 27 percent to $5.76 billion, mostly because of the 62-cents-per-pack federal tax increase on tobacco products that took effect in April 2009
Altria’s cigarette sales excluding excise taxes increased 5.5 percent to $3.4 billion during the first quarter.
The company says total cigarette volume edged down to less than 1 percent to 34.1 billion cigarettes from last year when retailers and wholesalers cut their orders ahead of a one-time federal tax on inventory.
Altria said its top-selling Marlboro brand gained 0.3 points of market share to end up with 42.7 percent of the U.S. market, driven by its menthol and special blend brand extensions. But its other brands, including Virginia Slims, Parliament and Basic, lost market share.
Like other tobacco companies, Altria is focusing on cigarette alternatives — such as cigars, snuff and chewing tobacco — for future sales growth as tax increases, smoking bans, health concerns and social stigma make the cigarette business tougher.
Altria saw lower volumes on Black & Mild cigars, but its smokeless tobacco business, which includes brands like Copenhagen and Skoal, saw its volume grow 21.9 percent during the quarter. Excluding excise taxes, revenue from its smokeless tobacco business grew 24 percent to $355 million and revenue from its cigar business fell 12 percent to $87 million.
The company also said it cut costs about $43 million in the first quarter and expects to save about $419 million more by the end of 2011.
Altria reaffirmed its full-year outlook for adjusted earnings from continuing operations to a range of $1.85 to $1.89 per share.
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