Earnings Preview: Altria Group Inc.

Altria Group Inc., owner of the biggest U.S. cigarette maker — Philip Morris USA — reports its fourth-quarter and full-year results before the stock market opens Thursday.

WHAT TO WATCH FOR: Whether the marlboro cigarettes sale continues to gain market share. Marlboro has gained market share as the number of cigarettes sold has declined industrywide in the face of recent tax increases, smoking bans and rising health concerns and social stigma.

The company said Marlboro accounted for 42.6 percent of cigarettes sold in the U.S. in the third quarter. Richmond-based Altria’s other brands, including Virginia Slims, Parliament cigarettes and Basic, lost market share.

Altria faces competition from other companies’ less expensive brands — like Pall Mall from Reynolds American Inc. and Maverick from Lorillard Inc. Even so, Altria has raised prices on some brands and maintained its profit per pack.

The company continues to work on cutting general and manufacturing costs by $1.5 billion compared with 2006.

Analysts also will be looking to see how Altria’s Black & Mild cigars and Copenhagen and Skoal smokeless tobacco products, as well as Marlboro Snus, perform. Its smokeless products have seen gains in recent quarters, while its cigar business saw volumes and market share dip in the latest period.

Altria and other tobacco companies are looking to cigarette alternatives — such as cigars, snuff and chewing tobacco — for growth.

WHY IT MATTERS: Increased spending on premium brands like Marlboro could signal consumers are adjusting to higher prices on premium cigarettes following a federal and state tax increases. Consumer spending continues to be critical to a strong rebound from the worst economic downturn since the Great Depression.

WHAT’S EXPECTED: Analysts expect Altria to earn 45 cents per share on sales of $4.22 billion, according to FactSet. Analysts typically exclude one-time items from their earnings estimates.

LAST YEAR’S QUARTER: Altria reported net income of 35 cents per share, not adjusted to exclude one-time items. Its revenue was $4.1 billion, excluding excise taxes.

source: The Associated Press.

Similar Posts:

If you enjoyed this post, make sure you subscribe to my RSS feed!