US: Altria Sees Better-Than-Expected Profit, Despite Lower Volume
Cigarette giant Altria Group has reported a higher-than-expected quarterly profit, despite lower volumes, helped by a price hike. For the quarter, net profit was down to $589m, from $2.45bn last year, although last year’s results included $1.84bn from its Philip Morris International operations, which it spun off last year. Excluding one-time items, earnings per share rose to 39 cents from 37 cents per share a year earlier. Revenue, meanwhile, was up 2.6% to $4.52bn.
The group’s Philip Morris USA unit saw volumes fall 14.2% year-on-year after wholesalers and retailers reduced inventories to avoid a hike in federal tax on cigarette prices. The sellers would have been subject to the higher excise tax if they held them on 1 April. The company's market share fell to 50.9% in the US, from 51.2% a year ago.
CEO Michael Szymanczyk said it was too early to anticipate the long-term impact of the tax hike, and said Philip Morris may have lost some market share after it raised prices before its rivals, in anticipation of the tax increase. However, he said this could reverse, as rivals adjust prices to account for the higher taxes.
Altria stood by its 2009 forecast of earnings of $1.70 a share to $1.75 a share, excluding one-time items.
NamNews - Thursday 23rd April 2009