Earnings Preview: Altria Group Inc.

AP News
Posted: Oct 18, 2010 3:44 PM
Earnings Preview: Altria Group Inc.

Altria Group Inc., owner of the biggest U.S. cigarette maker _ Philip Morris USA _ reports its third-quarter results before the stock market opens Wednesday.

WHAT TO WATCH FOR: Whether the top-selling Marlboro brand continues to gain market share.

As the number of cigarettes sold has declined industrywide in recent quarters in the face of tax increases, smoking bans and rising health concerns and social stigma, Marlboro has gained market share. In the second quarter, the brand accounted for a record 42.8 percent of cigarettes sold in the U.S.

Richmond-based Altria's other brands, including Virginia Slims, Parliament and Basic, lost market share. Altria faces competition from other companies' less expensive brands _ like Pall Mall from Reynolds American Inc. and Maverick from Lorillard Inc. Even so, Altria has raised prices on some brands.

The company continues to chip away at its manufacturing and general expenses.

Analysts also will be looking to see how Altria's Black & Mild cigars and Copenhagen and Skoal smokeless tobacco products perform. Both have seen gains in recent quarters.

Altria and other tobacco companies are looking to cigarette alternatives _ such as cigars, snuff and chewing tobacco _ for growth.

WHY IT MATTERS: Increased spending on premium brands like Marlboro could signal consumers are adjusting to higher prices on cigarettes following a federal tax hike last year, coupled with many state tax increases. Consumer spending will be critical to a strong rebound from the worst economic downturn since the Great Depression.

WHAT'S EXPECTED: Analysts polled by Thomson Reuters expect Altria to earn 50 cents per share on sales of $4.42 billion.

LAST YEAR'S QUARTER: Altria reported net income of 48 cents per share on revenue of $4.32 billion, excluding excise taxes.