By Tripp Mickle
Cigarette volume declines at Altria Group Inc. eased in the
fourth quarter, suggesting the Marlboro maker is getting a lift
from the rebounding U.S. economy and slowing growth in electronic
cigarettes.
The largest U.S. tobacco company said Friday its cigarette
shipments dropped 1.7% from the year-earlier quarter, compared with
3% to 4% declines in recent years. It also benefited from strong
pricing for Marlboro, which was up 16 cents to $6.02 per pack from
a year earlier.
"Our view is that the adult tobacco consumer is feeling better
about their economic situation and their economic future," said
Altria Chief Executive Marty Barrington during a conference call
with analysts, adding the company expected "some modest
improvement" this year.
Smokers typically earn less than the average American and were
disproportionately affected by the recent recession and slow
recovery.
At the same time, alternative products like e-cigarettes have
been less of a drag than some industry observers predicted. Altria
estimated the market for battery-powered devices that heat liquid
nicotine grew by 50% to $2 billion in sales last year, less than
its estimated 160% increase in 2013. It still represents a small
slice of the $100 billion U.S. tobacco industry.
Altria said its cigarette revenue excluding excise taxes rose
3.3% to $3.91 billion in the fourth quarter from a year earlier.
Operating income at the division rose 7.6% to $1.72 billion.
Overall revenue at Altria, which also sells smokeless tobacco
products and wine, rose 2.9% to $6.26 billion from a year earlier.
Net income more than doubled to $1.24 billion from $488 million in
the year-earlier quarter. Altria retired $1.08 billion in debt
during the fourth quarter of 2013, dragging down its profit in the
year-earlier period.
Altria said its MarkTen e-cigarette, launched nationally last
year, is now available in 130,000 retail stores. It didn't share
e-cigarette sales results. MarkTen had an estimated 6% dollar share
of the e-cigarette market at traditional retail stores in November,
making it the No. 4 player, according to Morgan Stanley, citing the
data service IRI.
Company volumes of other smokeless products, mostly moist snuff,
rose 1.0% in the fourth quarter and 0.7% for the full year. That is
down from a 3.2% increase in 2013.
Altria also announced its chief operating officer, David Beran,
would retire March 1 after four decades with the company. Finance
chief Howard Willard will succeed Mr. Beran, and strategy and
business development executive William Gifford will become the new
chief financial officer.
Write to Tripp Mickle at Tripp.Mickle@wsj.com
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