Altria Group to Lay Off Workers to Cut Costs -- Update

By Tripp Mickle and Chelsey Dulaney 

Altria Group Inc. on Thursday said it plans to eliminate jobs as part of a cost-savings plan that will save the company $300 million annually.

During a call with analysts, Chief Executive Marty Barrington declined to say how many jobs would be cut because the company planned to notify staff of the layoffs after the call. He said the company wants "to have an organizational structure with fewer layers."

The Marlboro maker said the cuts would come from its selling, general and administrative areas and result in $210 million in employee-separation costs that will be recorded in the first quarter of 2016.

When asked during the call what the company planned to do with the $300 million in savings, Mr. Barrington declined to offer specifics but did say the company continues to invest in "reduced harm products" such as electronic cigarettes and in its brands.

"You always have to be mindful of costs over time," Mr. Barrington said when asked about what triggered the cost-savings plan. "If you have opportunities to improve in your infastructure or to improve your organization and to invest those savings in your brands or in your products for the future...you should do that."

Altria, the U.S.'s largest tobacco company, reported profit and revenue for the fourth quarter that narrowly missed Wall Street expectations as the tobacco company saw its cigarette shipments slip. The company is facing stronger competition from No. 2 player Reynolds American Inc., which last June closed a $25 billion acquisition of rival Lorillard Inc.

In its latest quarter, Altria said higher pricing helped offset a 2.6% decline in cigarette-shipment volume.

Altria's cigarette market share ticked up to 51.4% from 50.9% a year earlier, led by its discount and Marlboro brands.

Altria's earnings rose slightly to $1.25 billion, or 64 cents a share, from $1.24 billion, or 63 cents a share, a year earlier. Excluding litigation costs and other special items, per-share earnings were 67 cents, while analysts polled by Thomson Reuters forecast earnings of 68 cents.

Net revenue after excise taxes was $4.73 billion, up from $4.61 billion a year earlier.

Analysts had been expecting revenue of $4.75 billion.

For 2016, Altria is expecting earnings of $3 to $3.05 a share, excluding restructuring charges. Analysts had forecast earnings of $3.05 a share.

Write to Tripp Mickle at [e-mail] and Chelsey Dulaney at [e-mail]

(END) Dow Jones Newswires

January 28, 2016 10:35 ET (15:35 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.