Altria Group Inc. said its third-quarter diluted earnings per share from continuing operations were up 15% versus the third quarter last year ($0.46 versus $0.40), while net revenues increased 5% to reach $5.2 billion.
The company’s operating income increased 8.8% to $1.3 billion, primarily driven by higher operating companies income and lower general corporate expenses.
“In the third quarter, Altria’s cigarette business delivered strong financial results,” said Michael E. Szymanczyk, chairman and CEO. “PM USA’s adjusted operating companies income increased 6.3% and its operating margins continued to expand.”
The company agreed to acquire UST, the world’s largest smokeless tobacco company, in September.
“This acquisition is both strategically compelling and financially attractive as it enhances Altria’s ability to deliver superior shareholder value,” Szymanczyk said. “UST provides Altria with the leading premium brands, Copenhagen and Skoal, in the highly profitable moist smokeless tobacco category. We are very pleased that the transaction has passed federal antitrust review.”
In this emaciated economy, some price-sensitive smokers may be choosing cheaper tobacco solutions like roll-your-own cigarettes and small cigars. Altria said in a conference call that its retail share for the discount cigarette category grew by three-tenths of a share point over the year prior.
The company also said, however, the discount trend shouldn’t be a threat to its premium brands.