RICHMOND, Va. (AP) ? Marlboro maker Altria Group Inc. said Thursday its third-quarter profit rose nearly 4 percent as higher prices and gains from its smokeless tobacco and cigar brands helped to offset declining cigarette sales.
The owner of the nation’s biggest cigarette maker, Philip Morris USA, also reaffirmed its full-year forecast for adjusted earnings while announcing a new $1 billion share buyback and another $400 million in cost reductions.
Altria, based in Richmond, Va., earned $1.17 billion, or 57 cents per share, for the period ended Sept. 30, up from $1.13 billion, or 54 cents a share, last year. Adjusted earnings were 56 cents per share, matching analyst estimates.
Revenue, excluding excise taxes, fell 3 percent to $4.33 billion. Analysts polled by FactSet were expecting $4.44 billion.
Altria said its top-selling Marlboro brand lost 0.9 points of market share to end up with 41.7 percent of the U.S. market. Marlboro volumes declined 10 percent. Its other brands, including Virginia Slims, Parliament and Basic, also lost market share.
The company has introduced several new products with the Marlboro brand, often with lower promotional pricing. They include special blends of both menthol and non-menthol cigarettes to try to keep the brand growing and steal smokers from its competitors.
But Altria still faces pressure in the current economy from less-expensive brands such as like Pall Mall from Reynolds American Inc. and Maverick from Lorillard Inc.
Altria said cigarettes sales fell 9 percent to 33.3 billion compared with a year ago.
The company had cautioned last quarter that third-quarter cigarette volume and profitability would be hurt because wholesalers stocked up more than usual in the first half of the year. Adjusted for seasonal variations, the company said volumes declined 5 percent, worse than Altria’s industry estimate of a 3.5 percent decline.
Cigarette revenue excluding excise taxes fell 6 percent to $3.64 billion during the quarter despite higher prices.
Like other tobacco companies, Altria is focusing on cigarette alternatives ? such as cigars, snuff and chewing tobacco ? for future sales growth because the decline in cigarette smoking is expected to continue.
Excluding excise taxes, revenue from its smokeless tobacco business grew more than 9 percent to $398 million on higher prices. Volumes of its smokeless tobacco brands such as Copenhagen and Skoal were essentially flat.
For the quarter, the company’s smokeless tobacco brands had 55.2 percent of the market, which is tiny compared with cigarettes.
Volume for its Black & Mild cigars grew about 4 percent during the period. Revenue excluding excise taxes rose 21 percent to $109 million as it sold more while spending less money promoting the brand.
The company also owns a wine business and holds a voting stake in brewer SABMiller.
Altria has been forced to cut costs as tax hikes, smoking bans, health concerns and social stigma make the cigarette business tougher. During the third quarter, the company said it completed a multi-year cost savings program, exceeding its goal of reducing costs by $1.5 billion between 2007 and 2011 compared with 2006.
On Thursday, Altria rolled out a plan to cut $400 million in “cigarette-related infrastructure costs” by the end of 2013 in advance of anticipated cigarette volume declines. Altria restructuring charges will total 11 cents per share in the fourth quarter in connection with the program.
During the quarter, the company also completed a $1 billion share buyback program in which it repurchased 37.6 million shares. It intends to buy back another $1 billion worth of shares by the end of 2012.
Altria reaffirmed its full-year forecast for adjusted earnings between $2.01 and $2.07 per share.
It is the last of the largest U.S. tobacco companies to report its third-quarter results.
Rival Reynolds American, the nation’s No. 2 tobacco company, said Tuesday its third-quarter profit excluding charges related to legal cases and other costs rose nearly 4 percent. The maker of Camel, Pall Mall and Natural American Spirit brand cigarettes said higher prices, productivity gains and selling more of its smokeless tobacco brands that include Grizzly and Kodiak offset cigarette volume declines of 6.8 percent.
Lorillard, the nation’s No. 3 cigarette maker, said Monday its net income fell nearly 3 percent in the third quarter as higher costs offset selling more cigarettes at higher prices. It sold about 3 percent more cigarettes on gains on its Newport and its low-priced Maverick brand.
Michael Felberbaum can be reached at http://www.twitter.com/MLFelberbaum.