Altria Group , the parent of cigarette maker Philip Morris USA, said quarterly profit rose by 29%, helped by cigarette price increases and higher sales of cigarettes overseas.
Net income rose to $2.96 billion, or $1.40 a share, from $2.29 billion, or $1.09 a share, a year ago. Excluding one-time items, the company earned $1.27 a share.
Revenue rose 3.7% to $25.4 billion from $24.49 billion a year ago.
Analysts polled by Thomson Financial had predicted fourth-quarter earnings of $1.23 a share on $18.23 billion of revenue. The earnings estimates typically exclude one-time items.
However, news Wednesday morning of Altria's plans to spin off its majority stake in Kraft Foods overshadowed the earnings report.
Altria shareholders have been waiting for the spinoff of Altria's 88.6% stake in Kraft for several years, seeing it as the first step in a broad restructuring that will eventually separate its domestic and international tobacco businesses.
The earnings report gave investors another chance to review the performance of Altria's international tobacco operations, which are considered undervalued in the company's current structure.
Operating income at Philip Morris International rose 46.5% to $2.2 billion, as the number of cigarettes shipped rose 3.9% to 191.4 billion. Operating income included a $488 million gain from the restructuring of the company's business in the Dominican Republic.
Meanwhile, operating income at Philip Morris USA rose 4.2% to $1.1 billion, as higher prices helped offset a 0.4% decline in cigarettes shipped.
The company also increased its market share by 0.1 point to 50.1%, driven by sales of its Marlboro and Parliament brands.
Kraft posted a sharply lower quarterly profit as the company continued to work on plans to revive its business.
The largest North American food maker earned $624 million, or 38 cents a share, in the fourth quarter, compared with $773 million, or 46 cents a share, a year earlier.
Excluding one-time items, earnings were 51 cents a share, matching the average analyst estimate, according Thomson Financial.
The maker of foods ranging from Oreo cookies to Maxwell House coffee said sales fell 3% to $9.4 billion, in part from the effect of divestitures and having one less shipping week in 2006 compared with 2005.