Altria Group, the parent company of Philip Morris USA, leading tobacco company across the nation reported on April, 21st about its first quarter profits, which according to the company added 38 percent, as its flagship brand Marlboro gained an even bigger market share, while its major smokeless brand Copenhagen also grew its share.
The Philip Morris owner, based in Richmond stated that price increases, rise in market share in the cigarette segment, growing popularity of smokeless tobacco and successful wine business helped to offset present economic challenges.
Altria showed an impressive performance regardless of the reduction of consumer confidence, and huge layoffs from the closure of a cigarette manufacturing plant last summer, as well as many challenge in shrinking cigarette market, according to Michael E. Szymanczyk, Altria’s Chief Executive Officer.
Marlboro that was selling for an average of approximately $5.42 a package won 0.3 percent of market share to account for a highest-ever 42.7 percent of the national cigarette market, thanks to its latest additions – Marlboro Menthol Blend No 54 and Marlboro Special Blend. The legendary brand contributed to Philip Morris’s cigarette sales rise 5.5 percent to end up with $3.4 billion over the 1Q (excluding excise taxes).
Altria states that cigarette sales sank less than 1% to 34.1 billion from 2009 quarter, when shipments were cut in anticipation of the one-time federal cigarette tax on inventory.
However, the company said this, when its overall sales dropped 11 percent last year, in comparison to its calculation of a 10 percent industry wide decline.
Sales of flagship Marlboro rose 1.6 percent, whereas other major brands, among which are Virginia Slims and Parliament dropped sale volumes and lost market share.
Altria CEO admitted that taking into account Marlboro’s growth it is evident that consumers consider the state of things to be acceptable currently.
According to the report, the company earnings constituted $813 million, up from $589 million reported previous year.
Earnings excluding excise taxes went up by nearly 2% to $3.9 billion. Industry experts predicted profits of $3.84 billion. When including taxes, the earnings increased by 27 percent to $5.76 billion, in the most part due to the implementation of the latest federal tax of 62 cents per pack, which entered into force in April 2009.
Like its major rivals, Altria is concentrating on other tobacco products – such as smokeless tobacco, cigars, and loose tobacco – considering these products to be the key of future success, since the implementation of anti-smoking policies, heftier taxes and the spread of social stigma concerning the effect of cigarette smoking on public health cause the national cigarette market to shrink.
Altria reported about the decrease in the sales of Black & Mild cigars, however its snuff business, with such brands as Copenhagen and Skoal, showed an astonishing performance by growing by 21.9 percent over the first months of 2010. Excluding taxes, earnings from cigar sales dropped 12 percent to end up with $87 million in the first quarter, while smokeless tobacco brought the company $355 million, a 24percent increase.