Tobacco company Altria Group, Inc. (MO) on Thursday reported a 32 percent increase in profit for the fourth quarter from last year, reflecting higher revenues and the absence of one-time charges. Adjusted earnings per share matched analysts' expectations. Looking ahead, the company forecast fiscal 2013 earnings in line with analysts' estimates.
Fourth-quarter net revenues for the smokeable products segment grew 2 percent, primarily due to higher list prices that were partly offset by higher promotional investments to support Marlboro's new brand architecture.
Total cigarette volume for the quarter edged up 0.4 percent, with Marlboro recording an increase of 0.3 percent in volume. Meanwhile, cigar volume declined 1 percent, primarily due to changes in trade inventories and retail share losses.
In the smokeless products segment, net revenues grew 7 percent on higher pricing and volume that was partly offset by unfavorable mix due to growth in products introduced in recent years at a lower, popular price. The company noted that volume in the smokeless products segment increased almost 10 percent. Copenhagen saw a 12 percent increase in volume, while Skoal volume grew 9 percent.
Altria's fourth-quarter net earnings rose to $1.10 billion or $0.55 per share from $836 million or $0.41 per share in the year-ago period. The prior-year quarter's results include asset impairment costs of $0.07 per share, SABMiller special items of $0.01 per share, tobacco and health judgments of $0.04 per share, and a tax benefit of $0.03 per share.
Excluding these items, adjusted earnings for the latest quarter were $0.55 per share, compared to $0.50 per share in the year-ago period. On average, ten analysts polled by Thomson Reuters expected the company to earn $0.55 per share for the quarter. Analysts' estimates typically exclude special items.
Net revenues for the quarter rose 2 percent to $6.24 billion from $6.13 billion in the same period last year, primarily reflecting higher net revenues from smokeable products that were partly offset by lower revenues from financial services. Analysts had a consensus revenue estimate of $4.33 billion.
For fiscal 2012, Altria's net earnings increased to $4.18 billion or $2.06 per share from $3.39 billion or $1.64 per share in the previous year. Adjusted earnings for the year were $2.21 per share, compared to $2.05 per share in the prior year.
Net revenues for the year grew 3 percent to $24.62 billion from $23.80 billion last year.
Analysts expected the company to earn $2.21 per share for the year on revenues of $17.40 billion.
Altria has about $57 million remaining in the current $1.5 billion share repurchase program that it expects to complete by the end of the second quarter of 2013.
Looking ahead to fiscal 2013, Altria forecasts reported earnings per share in a range of $2.34 to $2.40, and adjusted earnings per share in a range of $2.35 to $2.41. This compares to adjusted earnings per share of $2.21 in 2012. Analysts expect the company to earn $2.38 per share for the year.
The reported earnings outlook reflects estimated SABMiller plc special items and does not reflect the potential impact of PM USA's agreement to resolve the Non-Participating Manufacturer or NPM adjustment disputes.
Altria and other cigarette makers had earlier reached an agreement with 17 states, the District of Columbia and Puerto Rico, to resolve long-standing disputes over payments tied to a landmark tobacco settlement.
Based on the current signatory states and an estimate of the 2012 NPM adjustment, Altria estimates it would receive a credit of about $450 million toward its planned Master Settlement Agreement or MSA payment due in April.
Altria anticipates that 2013 capital expenditures in a range of $125 million to $150 million, and depreciation and amortization of about $215 million.
MO closed Wednesday's trading at $33.70. In Thursday's pre-market, the stock is adding $0.22 or 0.65 percent to $33.92.
by RTT Staff Writer
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