RICHMOND, Va. - Altria Group Inc.'s first-quarter profit dropped 15 per cent as the Marlboro maker sold fewer cigarettes and its year-ago results benefited from lower expenses from a longstanding legal settlement.
The owner of the nation's biggest cigarette maker, Philip Morris USA, said Thursday that its cigarette shipments fell 2.5 per cent to 29 billion cigarettes during the quarter. Adjusting for trade inventory changes, cigarette volumes fell 3.5 per cent, compared with the total industry decline of about 4 per cent.
Volumes of its premium Marlboro brand fell more than 2 per cent but its share of the retail U.S. market rose 0.2 percentage points to 43.8 per cent. The company's share of the U.S. retail market rose 0.2 percentage points to 50.7 per cent.
The Marlboro brand has been under pressure from competitors and lower-priced cigarette brands amid economic uncertainty and high unemployment. The brand sold for an average of $5.91 per pack during the first quarter, compared with an average of $4.43 per pack for the cheapest brand.
The increased competition is on top of the tax hikes, smoking bans and a social stigma that have made the cigarette business tougher.
Altria and others are focusing on cigarette alternatives â€” such as electronic cigarettes, cigars, snuff and chewing tobacco â€” for future sales growth because the decline in cigarette smoking is expected to continue.
Adjusted volumes for its smokeless tobacco brands such as Copenhagen and Skoal grew about 6 per cent. Volumes for its Black & Mild cigars rose less than a per cent.
Altria also owns a wine business, holds a voting stake in brewer SABMiller, and has a financial services
The company posted earnings of $1.17 billion, or 59 cents per share for the period ended March 31. That's down from $1.38 billion, or 69 cents a share, in the year-ago period when it recorded more credits for disputed payments under the 1998 multistate tobacco settlement.
Excluding one-time items, earnings were 57 cents per share, matching Wall Street expectations.
Altria, based in Richmond, Va., said that revenue, excluding excise taxes, increased less than a per cent to $4.01 billion as higher prices helped offset a decline in volumes. Analysts polled by FactSet expected $4.03 billion.
Its shares edged up 12 cents to $38.43 in midday trading Thursday. Its shares are up just over 8 per cent for the past year.
Michael Felberbaum can be reached at http://www.twitter.com/MLFelberbaum .