(By Salman - iStockAnalyst Writer)Altria Group Inc. (NYSE:
MO), the former parent company of Philip Morris USA, the largest U.S. tobacco company, is scheduled to report third-quarter results before the market open on Wednesday, October 21, 2009. Analysts, on average, currently expect the company to report earnings of 47 cents a share on revenue of $4.96 billion. In the year ago quarter, the company reported earnings of $0.86 billion or 42 cents per share on revenue of $5.24 billion.
Altria Group Inc. engages in the manufacture and sale of cigarettes and other tobacco products in the United States and internationally. The company also manufactures machine-made large cigars and pipe tobacco; and maintains a portfolio of leveraged and direct finance leases principally in transportation, including aircraft, as well as power generation and manufacturing equipment and facilities.
The demand for company's cigarettes has been impacted by decreasing social acceptability of smoking, increased regulation, public awareness of smoking's health risks, and rising costs due to excise taxes and litigation expenses. Altria shares have been also hurt by the fears that the company may have to ultimately cut prices of the cigarettes as unemployment continues to climb.
However, the company has managed to grow its profits despite negative press and other issues. In July, Altria said that its second-quarter net income increased to $1.01 billion, or 49 cents a share, from $930 million, or 45 cents a share, in the same quarter of 2008. On an adjusted basis, the company earned 50 cents a share. Revenue rose to $6.72 billion from $5.05 billion. Analysts, on average, expected the company to earn 46 cents a share on revenue of $4.87 billion.
However, its flagship Marlboro brand's retail share fell 0.6 share points in the quarter, mostly because of increased competitive promotions in April and May. At the John Middleton unit, cigar volume dropped 23.8% to 270 million units. Philip Morris USA shipped 40.6 billion cigarettes domestically in the quarter, down 6.8% from the prior-year period.
Altria reduced its general corporate expenses to $50 million from $73 million during the quarter. The company expects to achieve about $695 million in additional cost savings by 2011 for total cost reductions of $1.5 billion compared to 2006.
The company offers an outstanding dividend. In August, Altria Group boosted its quarterly dividend by 6.3% to 34 cents from 32 cents.
In September, the Richmond, Virginia-based seller of Marlboro cigarettes and Black & Mild cigars reaffirmed its fiscal 2009 guidance for earnings from continuing operations in a range of $1.51 to $1.56 per share. The company continues to anticipate adjusted earnings from continuing operations in the range of $1.72 to $1.77 per share, representing a growth of 4% to 7% from $1.65 per share reported in 2008. Analysts, on average, currently expect earnings of $1.74 per share for the full-year 2009. While reporting financial results for the second quarter, Altria had raised its 2009 guidance for reported and adjusted earnings from continuing operations.
In terms of stock performance, Altria shares are up 20% since the beginning of the year. Shares of the airline company rose 18 cents or 1.05% to $18.24 in afternoon trade on Thursday.
Disclosure: Author doesn't own any of the stocks discussed here.
