Altria Profit Beats Estimates; Higher Prices Help

Altria Group posted a higher-than-expected quarterly profit Wednesday, as price increases helped offset a drop in cigarette shipments related to a rise in the federal tax on cigarettes.

The parent of Marlboro cigarette maker Philip Morris USA and Skoal tobacco maker U.S. Smokeless Tobacco, also stood by its full-year earnings forecast.

U.S. cigarette makers are adjusting to a 62-cent-per-pack increase in the federal tax on cigarettes, which took effect on April 1, as well as a recessionary economy and a long-term decline in cigarette consumption.

Altria's net income fell to $589 million, or 28 cents a share, compared with $2.45 billion, or $1.16 a share, a year earlier. But year-earlier net income included $1.84 billion from discontinued operations, as the company spun off the Philip Morris International unit last year.

Excluding one-time items, earnings per share rose to 39 cents from 37 cents per share a year earlier. Analysts on average forecast 38 cents a share, according to Reuters Estimates.

Revenue rose 2.6 percent to $4.52 billion.

Philip Morris USA shipped 14.2 percent fewer cigarettes in the quarter than a year earlier as wholesalers and retailers reduced inventories that would have been subject to the higher excise tax if they held them on April 1.

The company's total cigarette market share fell to 50.9 percent of the U.S. market from 51.2 percent a year ago.

But profit in the Philip Morris unit rose 9.9 percent, as higher prices lifted margins. The company raised the price of Marlboro and other cigarettes by more than 70 cents per pack in March.

Altria stood by its 2009 forecast calling for earnings of $1.70 to $1.75 a share, excluding one-time items. Analysts on average forecast $1.73 a share.

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