Altria kicking the tobacco industry 3Q earns; analysts eye cigarette volume, loss of market share

Altria Group inc. presents its third-quarter results on Wednesday. Following is a summary of key developments and analyst opinion related to the period.

OVERVIEW: Richmond, Virginia based seller of cigarettes Marlboro, Black and Mild cigars, and in Copenhagen and Skoal smokeless tobacco products, is fighting the loss of market share.

Nevertheless, the owner of the largest U.S. cigarette maker, Philip Morris USA, said its second quarter profit rose 9 percent to 1.01 billion dollars, both to reduce costs and complex smokeless tobacco company UST Inc., industry recovered somewhat during this period as retailers have returned to visit on cigarettes. Retailers and wholesalers had reduced their orders ahead of the one-time federal tax on their inventory in April. Consumers are also adjusted to higher prices, which included the new federal taxes.

In the second quarter, the company said, declining among all cigarette brands, including Marlboro, Parliament, Virginia Slims and substantive. Marlboro, the best-selling brand in the U.S., lost 0.6 points of market share to end up with 41.2 percent of the U.S. market, according to Information Resources inc.

At the end of July, Altria stopped production at its Cabarrus County, NC, a cigarette factory, to help bring its production capacity in line with a decrease in cigarettes sold in the U.S., Altria said the closure would save $ 188 million in 2011. It said it expected pretax charges of about $ 175 million in the second half of 2009, primarily for the closure of the plant.

In the third quarter of last year, Altria said it earned $ 867 million on revenue of $ 5.24 billion.

In numbers: Analysts polled by Thomson Financial on average expect Altria to post a profit of 46 cents per share for the third quarter on revenue of $ 4.66 billion.

ANALYST TAKE: Analysts expect no quarter will be the first real indicator of the true volume of cigarettes per year in the industry saw a decline in the first half of the increase in federal taxes, which came into force on April 1.

Credit Suisse analyst Thilo Wrede wrote in the Oct. 13 investor note that he expects, Altria, is expected to post continued loss of market share and decline. But Deutsche Bank North America analyst Marc Greenberg said Tom reduction will be offset by higher prices.

Greenberg said the positive income based on the ability of Altria, to match the price in sales and its focus on profitable growth makes the company a "compelling value".

WHAT'S AHEAD: industry continues to see the effect of the U.S. Food and Drug Administration new authority to regulate tobacco granted in June. He believed that regulation hurt Altria least because the more stringent rules on marketing and new product introductions could strengthen its position as market leader.

Wall Street will look at ways to further smoking bans, higher taxes and regulation might affect cigarette volumes and profitability.

STOCK PERFORMANCE: During the quarter ended September 30, shares of Altria rose 6.8 percent to the end of the period at $ 17.81. Over the past 52 weeks, the stock traded between $ 14.34 and $ 20.74.