Earnings Preview: Altria to report 4Q results

NEW YORK - Altria Group Inc. reports earnings for its fiscal fourth quarter Thursday. The following is a summary of key developments and analyst opinion related to the period.

OVERVIEW: Altria, owner of the nation's largest cigarette seller, Philip Morris USA, closed on its $10.4 billion acquisition of smokeless tobacco company UST Inc. on Jan. 6. The buyout gives Richmond, Va.-based Altria the market leader in smokeless tobacco. Through Philip Morris USA, it sells Marlboros in the U.S.

While smokeless is a comparatively small segment, sales are growing so executives view it as a competitive frontier for the industry. With UST, Altria now sells the Copenhagen and Skoal brands, which vie for customer attention against Reynolds American's Conwood smokeless brands Grizzly and Kodiak.

Altria recently announced a $1 off promotion for its products to bring its prices closer to its competition. The promotion is designed to attract smokeless users in the Southeastern U.S.

The companies are pursuing smokeless sales as cigarette volumes decline. Consumers are buying fewer packs as they face smoking bans, higher taxes and health concerns.

BY THE NUMBERS: Analysts polled by Thomson Reuters, on average, expect fourth-quarter earnings of 17 cents per share on $1.95 billion in revenue.

ANALYST TAKE: Deutsche Bank analyst Marc Greenberg told investors he expects "continued volume decline but pricing and margin gains" in tobacco.

WHAT'S AHEAD: Stifel Nicolaus & Co. analyst Christopher Growe told investors that U.S. tobacco companies face a tough environment in the short term, with the threat of a federal excise tax increase, state excise tax increases, potential FDA oversight and smoking bans.

All those things could cause profits to decline slightly in 2009, the analyst said. Growe said, however, the industry still can raise prices to generate profits, even as cigarette sales volume declined by about 3 percent a year.

STOCK PERFORMANCE: During the quarter, which ended Dec. 31, shares fell about 24 percent to $15.06. Shares have traded between $14.34 and $77.89 in the last 52 weeks, a period when the company still included Philip Morris International Inc.

They closed Monday at $16.69.

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