Altria Earnings Up on Higher Shipment Volumes

Altria Group Inc. reported a better-than-expected 5.2% sales increase in the first quarter as cigarette shipment volumes improved.

Results beat Wall Street expectations.

The largest U.S. tobacco company said Thursday that its cigarette shipments grew 1.6% from the year-earlier quarter, compared with 3% to 4% declines in recent years. The shipment volume of total smokable products also increased 1.6%.

Smokers typically earn less than the average American and were disproportionately affected by the recent recession and slow recovery.

At the same time, alternative products like e-cigarettes have been less of a drag than some industry observers predicted. Altria estimated the market for battery-powered devices that heat liquid nicotine grew by 50% to $2 billion in sales last year, less than its estimated 160% increase in 2013. It still represents a small slice of the $100 billion U.S. tobacco industry.

Overall, revenue at Altria, which also sells smokeless tobacco products and wine, rose 5.2% to $5.8 billion from $5.52 billion a year earlier. Earnings increased 13% to $1.02 billion from $1.18 billion in the year-earlier quarter. Per-share earnings fell to 52 cents from 59 cents in the year-earlier period.

Excluding restructuring costs and other special items, per-share earnings were 63 cents, up from 57 cents last year.

Analysts had expected per-share earnings of 62 cents on revenue of $4.13 billion.

Company volumes of other smokeless products, mostly moist snuff, grew 2.7% in the first quarter.

Earlier this month, rival Reynolds American Inc. said its revenue grew 6.3% in the March quarter because of higher pricing that offset declining volumes. Lorillard Inc., which is in the process of being acquired by Reynolds, posted a 4.8% sales increase.

Shares of Altria have been up 6% this year through Wednesday's close.

Write to Angela Chen at [e-mail]

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