Altria Prepares its 2Q Financial Results

Published on July 30th, 2013 00:00

Altria, parent of the largest U.S. cigarette manufacturer, Philip Morris USA, should really offer investors a proof that its best-selling Marlboro brand can preserve its control over the tobacco market when it presents its 2Q financial results.

The world-class Marlboro brand has faced a considerable pressure from rivals and lower-priced cigarette brands. The economic difficulties come together with the tax boosts, smoking bans and health issues that have created unfavorable conditions for the cigarette business. At the same time, the industry proceeds to increase prices in spite of decreasing cigarette volumes. The Marlboro brand was sold for approximately $5.79 per package in the course of the1Q, in contrast to about $4.32 per package for the lower priced brand.

The manufacturer has launched some new smoking products with the Marlboro brand, they consist of exclusive blends of both menthol and non-menthol cigarettes in order to try to preserve the brand expanding and to attract more and more cigarette lovers.

Marlboro volumes dropped more than 5 % to 25.4 billion cigarettes for the 1Q and finally end up with 43.6 % of the U.S. market. Volumes for lower priced cigarette brands as L&M have elevated almost 6 % and volume for its similar high quality as Parliament and Virginia Slims brands dropped by over 12 %. Nevertheless the company's share of the U.S. retail market increased 0.5 percentage points to 50.5 % within the quarter. Altria is still facing pressure from lower priced cigarette brands such as Pall Mall from Reynolds American and Kent from Lorillard. For instance Pall Mall volume dropped 2 % in the course of the 1Q however its market share increased 0.5 percentage points reaching 9 %. Winston's volume dropped 6.5 % in the course of the similar period. After concluding a $1.5 billion cost savings programing 2013 the manufacturer presented a plan to reduce about $400 million in tobacco-related infrastructure costs by the end of 2013 before the expected cigarette volume decreases.

Raised spending on high quality cigarette brands such as Marlboro could display that smokers are eager to pay more for cigarettes right after federal and state tax boosts.Industry experts foresee Altria to gain 63 cents per share on profit of $4.62 billion. Altria documented adjusted net revenue of 59 cents per share on profit of $4.6 billion.