Oct. 21--Altria Group Inc.'s profit edged higher in the third quarter despite a doubling in the federal excise taxes it paid on its tobacco products.

An 8.8 percent, or nearly $200 million, drop in the cost of making its cigarettes, cigars and smokeless tobacco boosted the Henrico County-based company's bottom line.

Altria reported earnings for the third quarter rose slightly to $882 million from $867 million a year ago, or 43 cents a share from 42 cents. Revenue rose by $1.06 billion to $6.3 billion.

The nation's No.1 maker of cigarettes and smokeless tobacco reported that its flagship Marlboro brand reversed a monthslong slide in its market share, gaining 0.1 percentage points from last year to capture 41.9 percent of the market.

Altria, parent of Philip Morris USA, said quarterly cigarette sales declined 16.4 percent, to 37.5 billion cigarettes, compared to the 2008 period. Revenue from cigarettes rose 11 percent, or by $542 million, to $5.63 billion.

But that increase was more than offset by the $1.02 billion increase in federal excise taxes the company had to pay. The 61.66 cent-a-pack increase that took effect in April year brought federal taxes on cigarettes to just over $1 a pack.

Cost-cutting, though, eased the impact. Philip Morris USA's operating income slipped only 2.6 percent to $1.33 billion.

Altria's smokeless tobacco sales declined 4.5 percent, to 158 million cans or packs, from last year's level, while its Copenhagen brand's market share edged 0.3 percentage points higher to 23.3 percent, while Skoal's share slipped by 0.3 percentage points to 23.6 percent.

The company's cigar operation's revenue rose 56.1 percent, or $55 million, to $153 million for the quarter. That was larger than the $40 million increase in excise taxes it paid, learning its operating income up 32 percent to $49 million. Sales rose 3.9 percent to 341 million cigars.

The Henrico County-based company's latest view on its likely earnings for the year is that they will come in on the higher end of the range it gave earlier, or somewhere between $1.53 to $1.56 per diluted share for continuing operations.

For the first nine months of the year, its earnings from continuing rose to $1.19 per diluted share from $1.15, reflecting an increase in earnings from continuing operations to $2.48 billion from $2.41 billion. Revenue for the nine month was up 19.3 percent to $17.54 billion. Diluted per share earnings reflects the effect of securities that can potentially be converted in shares of stock.

-----

To see more of the Richmond Times-Dispatch, or to subscribe to the newspaper, go to http://www.timesdispatch.com.

Copyright (c) 2009, Richmond Times-Dispatch, Va.

Distributed by McClatchy-Tribune Information Services.

For reprints, email tmsreprints@permissionsgroup.com, call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA.

NYSE:MO,

A service of YellowBrix, Inc.