Altria Earnings Expected to Increase on Strong Pricing -- Earnings Preview

Altria Group, Inc. is scheduled to announce its third-quarter earnings before the market opens Thursday. Here's what you need to know:

EARNINGS FORECAST: Profit of 68 cents a share is the consensus of analysts surveyed by Thomson Reuters, compared with 65 cents per share a year earlier. The company hasn't provided guidance for the quarter, but in July, it narrowed its full-year guidance to $2.54 per share to $2.59 per share. Analysts expect $2.57 a share.

REVENUE FORECAST: Revenue of $4.74 billion is forecast compared with $4.76 billion a year earlier.

WHAT TO WATCH:

PRICING: Altria raised prices on its cigarette brands by more than 60 cents a carton in May, which helped offset declines in cigarette volume earlier this year. With industry volumes falling 2.3% over the quarter, lower than historical averages, analysts expect profitability of the company's flagship Marlboro brand to be strong.

ELECTRONIC CIGARETTES: Altria began a national rollout of its MarkTen e-cigarette brand in June. It has invested heavily in marketing and sales to support the brand, but at the start of the month, MarkTen claimed just a 9% share of the retail market and trailed category-leaders Blu (27% share) and Vuse (24% share), according to analysis of IRI data by Morgan Stanley. It will continue promoting the brand in the coming months, but it will need to pick up market share to offset future promotional spending.

SMOKELESS TOBACCO: It's supposed to get worse before it gets better for Altria's smokeless brand Skoal. Altria is in the midst of turning around the brand. Its volume decreased 6.1% during the second quarter. The decrease was offset by Altria's Copenhagen brand, which rose 7.8% over the period. Analysts expect another decrease for Skoal this quarter. While Copenhagen's growth helped the smokeless products group increase revenue 3.6% over the first half of the year, Skoal's turnaround is key to future growth.

Write to Tripp Mickle at [e-mail]

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