Boston, MA 10/28/2013 (wallstreetpr) – Altria Group Inc. (NYSE:MO)’s strategy to pay off debt early gave results with its quarterly profit doubling. The profits were also helped by lower legal settlements as well as increase in sales, and prices of cigarettes and smoke-less products. The earnings were $1.39 billion up from $657 million recorded for the same quarter last year. The earnings translate to $0.70 per share up from $0.32 per share recorded last year. Revenues excluding excise taxes were $4.80 billion, beating analysts’ expectations of $4.53 billion. The rise was 6.6% as compared to the same period last year.
The company has been facing intense competition from cheaper brands. High unemployment, economic uncertainty as well as tax hikes had taken a toll on the company’s financial health. Many states have implemented stricter smoking bans and the company has to pay some states for smoking related health care costs under the 1998 Master Settlement Agreement. The company got a benefit of $145 million from disputed payments under this agreement. In spite of these issues and the social stigma attached to smoking, the company saw volumes increase by more than 1% to 34.10 billion cigarettes. Volumes for its premium brand, Marlboro, increased by 1.5%, though volumes of other premium brands fell by 7%. Other discount brands like L&M saw volumes increase by 5%. Such increases are heartening when the industry saw decline in volumes by 3.5%. Marlboro now accounts for 43.7% of all cigarettes sold in the U.S. while the company’s overall market share is 50.7%. Average prices for the Marlboro brand also increased to $5.86 per pack as compared to $4.36 per pack of other brands.
The company has also diversified into cigarette alternatives like electronic cigarettes, snuff and chewing tobacco. This is likely to offset expected decline in cigarette smoking. The company enjoys a market share of 55% in the smokeless tobacco market though its overall contribution to the tobacco market is still insignificant.
The stock of the company was trading at $36.25 at the end of trading on October 25, 2013.
