Altria Profits Drop 9%
Company sees some gains from pricing and smokeless tobacco
RICHMOND, Va. -- In addition to announcing the upcoming retirement of CEO Michael Szymanczyk, Altria Group Inc. reported that fourth-quarter profit fell about 9% on lease and restructuring charges last week, despite gains from higher prices and smokeless tobacco products.
In cigarettes, Philip Morris USA's volumes were up slightly for the quarter at 33.7 billion units (+.2%)—primarily attributed to trade inventory dynamics and retail share gains for L&M, partially offset by retail share losses on Marlboro and its other brands as well as one less shipping day. Szymanczyk said the company continues to focus on maximizing income from its cigarette business while maintaining modest share momentum on Marlboro over time.
The cigarettes segment’s net revenues increased 2.9% for the fourth quarter, primarily due to higher list prices, and revenues net of excise taxes grew 4.2%. For the full year of 2011, the cigarettes segment’s net revenues decreased 1.1% primarily due to lower volume, partially offset by higher list prices, and revenues net of excise taxes grew 0.4%.
The smokeless products segment’s 2011 fourth-quarter and full-year net revenues and revenues net of excise taxes increased primarily due to higher volume and pricing. 2011 fourth-quarter and full-year net revenues increased 6.6% and 4.8%, respectively, and revenues net of excise taxes increased 6.8% for the fourth quarter and grew 5.0% for the full year of 2011.
The cigars segment’s 2011 second-half financial results were stronger compared to the first half of 2011 as Middleton made significant progress on improving its profitability and margins through new product introductions and brand-building initiatives on Black & Mild. As a result of these initiatives, Black & Mild achieved strong 2011 fourth-quarter and full-year retail share results.
The cigars segment’s 2011 fourth-quarter net revenues increased 7.3% primarily due to lower promotional spending and higher list prices, partially offset by lower volume. 2011 full-year net revenues grew 1.3% primarily due to higher list prices. Revenues net of excise taxes increased 26.8% for the fourth quarter and grew 3.4% for the full year of 2011.
The company also announced a continued focus on developing lower risk products with agreement with Okono A/S, an affiliate of Fertin Pharma A/S, to develop non-combustible nicotine-containing products for adult tobacco consumers. "Fertin is a global leader in the development and manufacture of nicotine gum with additional capabilities and other products and technologies," Szymanczyk said.
As previously reported in CSP Daily News, Szymanczyk also said he will retire as chairman and CEO after the company's annual shareholder's meeting in May. Martin Barrington will step into the role, and David Beran will serve as Altria's president and chief operating officer. For more on that story, please click here.
Altria directly or indirectly owns 100% of each of PM USA, USSTC, Middleton, Ste. Michelle and PMCC. Altria holds a continuing economic and voting interest in SABMiller.