Wednesday, October 24, 2012

Altria Group, Inc. (NYSE:MO) to be watched for Marlboro sales

Altria Group, Inc.(NYSE:MO), which owns the popular Marlboro brand, will be keenly watched when it announces its third quarter results on Thursday, to gauge whether its cigarettes can hold their market leader position.

Analysts expect Altria to earn 58 cents per share on revenue of $4.36 billion. In the year-ago quarter the company had reported adjusted net income of 56 cents per share on revenue of $4.33 billion.

In the third quarter of 2011, the company, which is the parent of U.S. cigarette maker Philip Morris, has experienced one of its biggest falls in market share in four years of its Marlboro brand of cigarettes. The brand lost about 0.9 points of market share to garner about 41.7 percent of the market.

Declining cigarette sales is an industry-wide phenomenon and all cigarette-making companies are struggling with it.

The company has tried to maintain the brand at its premier position by selling several other products with it, often at lower prices a tactic adopted by other cigarette companies as well.

With greater awareness of the health hazards of smoking, ban on smoking in public and other places, higher taxes and the social stigma associated with being a smoker, Americans are smoking less these days and tobacco companies are looking to other markets to sell their products.

The Altria Group is facing pressure from other brands such as Pall Mall and Maverick, both of which are cheaper than Marlboro.

In the second quarter, the Marlboro brand gained 0.3 point of market share to end up with 42.9 percent of the U.S. market despite a less than 1 percent decline in the number of Marlboro-branded cigarettes sold. Altria's overall cigarette volumes were flat at 36.2 billion cigarettes as an increase of 24 percent in its discount cigarette brands offset declines in its premium brands.

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