Cigarette Maker Says Earnings Soared 34% in the First Quarter

By THE ASSOCIATED PRESS
Published: April 21, 2006

RICHMOND, Va., April 20 (AP) — The Altria Group, owner of the world's largest cigarette business and controlling shareholder of Kraft Foods, said on Thursday that its first-quarter profit rose 34 percent on a tax benefit and the strong performance of its domestic tobacco operations.

Altria earned $3.48 billion, or $1.65 a share, in the quarter, up from $2.6 billion, or $1.25 a share, in the period a year ago. The recent results include a benefit of 46 cents a share from a reversal of tax reserves after an Internal Revenue Service review of the company's returns from 1996 to 1999, along with several other items.

Excluding all items, Altria earned $1.28 a share, matching the estimate of analysts surveyed by Thomson Financial.

Without the items, the chief executive, Louis C. Camilleri, said the businesses still delivered operating results that met management's expectations.

Philip Morris USA, its domestic tobacco operation, based in Richmond, led them all with the strong performance of the leading Marlboro brand, he said.

On Wednesday, Kraft reported a 41 increase in first-quarter earnings, mainly because of its piece of the favorable tax audit. Its net income rose to $1.01 billion, or 61 cents a share, from $713 million, or 42 cents a share, in the period a year earlier. Altria owns 87.6 percent of Kraft.

Altria's revenue increased 3 percent, to $24.36 billion, in the quarter from $23.62 billion in the year-earlier period, led by a 4.3 percent increase in domestic tobacco sales.

Philip Morris USA delivered the best operating results, posting a 7.5 percent increase in operating income as it benefited from lower promotional allowance rates and higher reported volume. The company's shipment volume was up 1.2 percent, to 43.3 billion units — but was essentially flat when adjusted for the additional shipping day in the quarter when compared with a year ago.

In the United States, the tobacco unit increased its retail share to 50.4 percent in the quarter, up from 50 percent in the year-earlier period as Marlboro continued to gain a bigger chunk of the market.

The food divisions' operating income was down — North American food by 1.5 percent and international food by 44 percent.

Shares rose $1.08, to close at $70.04.