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Altria 4Q profit rises on smokeless tobacco

Altria 4Q profit rises on smokeless tobacco

Altria Group, maker of Marlboro cigarettes, said Thursday that its fourth-quarter profit climbed 7 percent on strong sales of products like chewing tobacco as well as lower costs.
The owner of Philip Morris USA also anticipates adjusted 2010 earnings will be in range of Wall Street expectations even though economic conditions remain a challenge.
Still, the company said consumers are under a lot of economic pressure and a growing number of people are unemployed. And it's not just consumers who are worried about money.
Altria said Thursday it expects new tax proposals this year from many states that are having a hard time balancing the budget.
That could exacerbate the trend of smokers giving up well known brands like Marlboro and trading down for cheaper cigarettes.
For the year, profit fell 35 percent to $3.21 billion, or $1.54 per share, compared with $4.93 billion, or $2.36 per share, in the previous year.
Still, the company's profits grew during the past quarter on cost cuts and strong sales of Skoal and Copenhagen.
The company, based in Richmond, Virginia, earned $725 million, or 35 cents per share, for the period ended Dec. 31, compared with $679 million, or 33 cents per share, it reported a year earlier.
The company was helped by reduced corporate asset impairment and exit costs, which dropped to $30 million from $100 million.
Taking out asset impairment costs and other one-time charges, profit was 39 cents per share.
Revenue grew 29 percent to $6.01 billion from $4.65 billion on higher prices related mostly to the 62-cents-per-pack federal tax increase on tobacco products that took effect on April 1, 2009 as well as its smokeless tobacco company UST LLC acquisition. The results easily topped Wall Street's revenue expectations of $4.14 billion.
The company introduced a new smokeless tobacco product, Copenhagen Long Cut Wintergreen, which helped grow the brand's retail share by 1.5 share points.
Cigarette sales for brands like Marlboro were hurt by rising ad spending from rivals, the company said.
Annual revenue improved to $23.56 billion from $19.36 billion.
While Altria Group Inc. expects 2010 to still be difficult due to high unemployment and soft economic conditions, its guidance for adjusted earnings of $1.85 to $1.89 per share is in range of analysts' $1.87 per share prediction.