Altria Group posted lower quarterly profit Wednesday, due in part to costs for closing a U.S. cigarette plant and moving some production to Europe as it attempts to cut costs and reduce excess capacity.
The company, which saw earnings pressured by its spinoff of Kraft Foods , also cut its full-year earnings forecast to reflect additional charges for asset impairment and other costs.
The parent of the Philip Morris tobacco companies, facing a shrinking U.S. cigarette market, has been increasing its international presence, while also looking to introduce other tobacco products in the United States.
On Wednesday, the company announced an agreement to acquire an additional 30% stake in its Mexican tobacco business from its joint venture partner, Grupo Carso, S.A.B. de C.V. for $1.1 billion, bringing Altria's total stake to 80%. The deal is expected to add 3 cents a share annually to earnings, Altria said.
"It looks like it's accretive almost immediately, so it looks like good news and just a continued effort to seek growth internationally," said Charles Norton, portfolio manager of the Vice Fund.
Analysts expect Altria to announce plans to spin off Philip Morris International some time this year, following on the spinoff of Kraft earlier this year.
Altria's Earnings
Altria posted second-quarter profit of $2.22 billion, or $1.05 a share, compared with $2.71 billion, or $1.29 a share, a year earlier.
Results include a charge of $318 million related to the planned plant closure.
Excluding one-time items, earnings were $1.15 a share, compared with the consensus analyst estimate of $1.13, according to Reuters Estimates.
Altria said in June that it would close its Cabarrus, North Carolina, cigarette facility by the end of 2010, consolidating U.S. production at its Richmond, Virginia, plant and moving some production for non-U.S. markets to Europe.
Second-quarter total revenue rose 9.7% to $18.81 billion.
Excluding excise taxes, revenue was $9.80 billion. On that basis, analysts on average forecast $9.82 billion.
In the quarter, Philip Morris USA shipped 45.6 billion cigarettes, down 3.3% from a year earlier. But its Marlboro cigarettes increased market share to a record 41% from 40.6%, a year earlier.
Altria said Wednesday it would introduce new versions of Marlboros in September.
Separately, the company also said it will start to test market its Marlboro Snus, a smokeless and spitless tobacco product, in the Dallas/Fort Worth, Texas, area beginning next month.
Philip Morris International shipped 221 billion cigarettes, up 3.3%, largely due to an acquisition in Pakistan.
Through Tuesday, Altria shares were up 4.5% since spinning off Kraft in March, compared with a 12.8% gain by the Dow Jones Industrial Average , of which it is a component.