CEO

Altria CEO conducts his final shareholder meeting

AP News
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Posted: May 17, 2012 4:15 PM
Altria CEO conducts his final shareholder meeting

Outgoing Altria Group Inc. CEO Michael E. Szymanczyk finished his final shareholder meeting on Thursday much the same way as his first _ fielding attacks against the nation's largest tobacco company.

The owner of top-selling Marlboro cigarette maker, Philip Morris USA, held its annual meeting Thursday in its headquarters city of Richmond. It marked the last day for Szymanczyk, who has served as chairman and CEO since March 2008 and in the same capacity for Philip Morris USA from August 2002 through July 2008 before the company spun off Philip Morris International Inc.

"It has been an honor to lead the reshaping of Altria," said Szymanczyk, who got choked up during his closing remarks about his 23-year career. "Altria and its companies have experienced significant change since I first joined the company. Change is not new for our companies. They have been successful for more than a century because they have demonstrated the ability to adapt in dynamic industries and to the world around them."

Martin J. Barrington will replace Szymanczyk as CEO and chairman, and David R. Beran will serve as president and chief operating officer.

During his presentation to shareholders, Szymanczyk touted Altria's premium brands like Marlboro and said the company is well-positioned for future growth in a changing industry. In addition to Philip Morris USA, Altria owns U.S. Smokeless Tobacco Co., maker of brands such as Copenhagen and Skoal, and Black & Mild cigar maker John Middleton Co. The company also owns a wine business and holds a voting stake in brewer SABMiller.

In 2011, the company saw its net income fall 13 percent to $3.39 billion on lease, legal and restructuring charges. Its net revenue excluding excise taxes fell nearly 2 percent to $16.62 billion. Shipments fell 4 percent to 135.1 billion cigarettes, largely on declines from its premium brands.

However its 2012 first-quarter profit rose almost 4 percent as higher prices and cost-cutting helped offset declines in cigarette volumes. Shipments fell 2.6 percent to 31.1 billion cigarettes, but the Marlboro brand gained market share and ended the period with a 42.3 percent of the U.S. retail market.

"For nearly 60 years, Marlboro has been the cigarette that men smoke for flavor, and adult smokers have been invited to `Come to where the flavor is. Come to Marlboro Country,'" Szymanczyk said, adding that the company is evolving the brand to try to keep it growing and steal smokers from its competitors.

Like other tobacco companies, Altria is focusing on cigarette alternatives _ such as cigars, snuff and chewing tobacco _ for future sales growth because the decline in cigarette smoking is expected to continue.

Altria also has been forced to cut costs as tax hikes, smoking bans, health concerns and social stigma make the cigarette business tougher. After completing a $1.5 billion multiyear cost savings program last year, the company rolled out a plan to cut $400 million in "cigarette-related infrastructure costs" by the end of 2013 in advance of anticipated cigarette volume declines.

Szymanczyk said cost-cutting "continues to be a priority."

Over the years, the question-and-answer sessions of tobacco company annual meetings typically feature various groups attacking them for selling products that are responsible for about 443,000 deaths a year in the U.S. Szymanczyk's final shareholder gathering was no exception.

"With your retirement, I'm sure you look at your legacy. Certainly you and the company have a passion for success. I'm not sure about satisfying your customers and their preferences unless they all have a death wish," Anne Morrow Donley, co-founder of the Virginia Group to Alleviate Smoking in Public, told Szymanczyk. "At some point in the future, you and the company may indeed be charged with crimes against humanity _ I look forward to that."

The 63-year-old Szymanczyk did not respond to those remarks. He also has declined numerous requests for an interview with The Associated Press.

Shareholders on Thursday elected 11 directors to the company's board and rejected a shareholder proposal to have the company disclose its lobbying policies and practices.

Altria on Thursday also reaffirmed its full-year adjusted earnings guidance of between $2.17 and $2.23 per share. It also announced that its board declared a regular quarterly dividend of 41 cents per share. The dividend is payable July 10 to shareholders of record on June 15.

Shares of the company ended trading down 22 cents at $31.64.

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Michael Felberbaum can be reached at http://www.twitter.com/MLFelberbaum.