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Altria (MO) Q4 Profit Rises 32%, Guides 2013 EPS In Line With Street

 January 31, 2013 07:43 AM

(By Mani) Cigarette maker Altria Group, Inc. (NYSE: MO) said its fourth-quarter profit rose 32 percent and matched consensus view on lower costs and charges. The company has guided its 2013 profit in line with Street expectations.

Altira, which owns well-known brands such as Marlboro, Copenhagen, Skoal and Black & Mild, earned $1.1 billion, or 55 cents a share, higher than $836 million, or 41 cents a share, in the fourth quarter of 2011.

The results were boosted by lower charges, litigation costs, and marketing expenses. Excluding items also, it earned 55 cents a share, which came in line with analysts' consensus estimate.

Net revenues rose 1.8 percent to $6.24 billion, while analysts expected revenue of $4.33 billion. Higher revenues were primarily attributable to higher net revenues from smokeable products, partially offset by lower revenues from financial services.

The smokeless products segment' fourth-quarter net revenues increased 7.2 percent, primarily due to higher pricing and higher volume, partially offset by unfavorable mix due to growth in products introduced in recent years at a lower, popular price.

The Philip Morris USA unit expects to record a corresponding increase in its reported pre-tax earnings if the Master Settlement Agreement (MSA) proceeds with 17 states, District of Columbia and Puerto Rico.

The agreement includes a release to the signatory states of their portion of more than $4 billion from the MSA disputed payment account. In return, the manufacturers will receive reductions in future MSA payments. Based on the current signatory states, PM USA estimates its reductions to be about $450 million, all of which it expects to receive as a credit against its April 2013 MSA payment.

For 2013, Altria forecasts reported earnings of $2.34 to $2.40 a share. Full-year adjusted earnings are estimated to be in the range of $2.35 to $2.41, representing a growth rate of 6 to 9 percent from an adjusted earnings of $2.21 in 2012. Analysts expect earnings of $2.38 a share for 2013.

While there are signs of modest improvement in certain economic indicators, Altria remain cautious about the 2013 business environment. Adult consumers remain under economic pressure as they face the end of the payroll tax holiday, as well as continuing, high unemployment. With a number of states facing budget shortfalls, tobacco products will remain a target for excise tax increases.




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