Tobacco titan Altria Group Inc. said Wednesday that its first-quarter profit rose 38%, helped by demand for Marlboro cigarettes and Copenhagen smokeless tobacco.
Altria /quotes/comstock/13*!mo/quotes/nls/mo (MO 21.46, +0.29, +1.37%) earned $813 million, or 39 cents a share, in the quarter, up from $589 million, or 28 cents a share, a year earlier.
Revenue at the Richmond, Va.-based company rose 27% to $5.76 billion from $4.52 billion.
On an adjusted basis, the company said it would have earned 42 cents a share in the latest quarter.
The average estimate of analysts polled by FactSet Research had been for the company to earn 40 cents a share.
Altria said the business environment this year is likely to remain challenging. It maintained its forecast that its 2010 profit would come in at $1.78 to $1.82 a share, including charges of 7 cents a share related to exit, integration and implementation costs, UST-acquisition-related costs, and SABMiller /quotes/comstock/23s!a:sab (UK:SAB 2,009, 0.00, 0.00%) special items.
Knocking those out, profit is forecast to be $1.85 to $1.89 a share.
Altria spun off Philip Morris International /quotes/comstock/13*!pm/quotes/nls/pm (PM 51.99, +0.07, +0.13%) at the end of March 2008 in a move designed to separate the fast-growing overseas cigarette business from a U.S. unit hobbled by litigation worries, huge payments to states and seemingly inexorable year-on-year volume declines.
During the period, Philip Morris USA’s domestic cigarette shipments were down 0.7% while its flagship Marlboro brand’s retail share rose 0.3 percentage point to 42.7%. Marlboro volume was up 1.6%, while all of the company’s other brands suffered, in aggregate, double-digit declines.
Cigar volume at its Middleton unit was down 18.3%, a decline the company attributed to its belief that wholesalers stocked up in the year-earlier period in advance of an increase in federal excise taxes.
On the brighter side, sales of smokeless tobacco brands, including Copenhagen and Skoal, rose 28% versus the prior-year period.
“Marlboro achieved record retail share results in the first quarter, and Copenhagen regained its position as the largest smokeless tobacco brand, as measured by retail share,” Chief Executive Michael Szymanczyk said in the earnings report.
Standard & Poor’s reiterated its strong buy recommendation on the company’s shares following the report.
The company’s adjusted earnings were better than S&P’s estimate, wrote analyst Esther Kwon and “shipment decline of 0.7% was better than our view on easy comparison on inventory draw down last year.”
Further, “Marlboro retail share rose 0.3% year over year, while premium smokeless share increased from the fourth quarter and year ago quarter,” she added. “While we see volumes continuing to be impacted by inventory changes, we look for strong free cash flow generation.”
Shares rose about 1.4% to close at $21.46.