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Stocks of Altria, Reynolds up in wake of results

The tobacco makers' sales rise. Profit slips at the parent of Philip Morris, rises at its rival.

October 26, 2006|From the Associated Press

Profit slipped in the third quarter for the parent of the nation's biggest tobacco company while earnings climbed 45% for its biggest rival. But revenue rose for both companies and so did their shares.

Industry leader Altria Group Inc., the parent of Marlboro maker Philip Morris, also announced Wednesday that its board would meet in January to nail down plans for a long-awaited divestiture of its majority stake in Kraft Foods Inc., which makes Nabisco and Oscar Mayer products.

Altria's profit slipped less than a percentage point in the third quarter and said results were hurt by weak sales in Spain and Japan, but the company raised its earnings forecast for the full year.

Meanwhile, Reynolds American Inc. said its profit jumped 45% in the July-September period, helped by increased market share of its signature brands, such as Camel and Kool.

Altria's shares rose $2.28 to $82.10, while Reynolds' shares rose $1 to $65.40.

Altria, based in New York, reported net income of $2.87 billion, or $1.36 a share, compared with $2.88 billion, or $1.38, a year earlier.

Excluding certain restructuring and other costs, the company reported earnings per share of $1.39 compared with $1.37 last year. Wall Street analysts had expected earnings of $1.41 a share.

Altria's revenue rose 3.7% to $25.88 billion from $24.96 billion last year.

The company increased its forecast for full-year earnings per share to a range of $5.48 to $5.53, up from a previous forecast of $5.40 to $5.50.

For the first nine months of the year, Altria reported net income of $9.06 billion, or $4.31 a share, up from $8.15 billion, or $3.90, a year earlier. Revenue rose to $76 billion from $73.36 billion.

The earnings news was overshadowed by an announcement from the Altria board that said it would make a final decision on a Kraft divestiture at its Jan. 31 board meeting.

Altria cited greater certainty in the litigation environment as the reason to move forward with the divestiture plan.

An appeals court Tuesday granted a temporary stay in a "light" cigarettes case accusing Altria, Reynolds American and other defendants of deliberately misleading smokers into believing light cigarettes are safer than regular ones.

Winston-Salem, N.C.-based Reynolds earned $309 million, or $1.05 a share, up from $2.13 million, or 72 cents, a year earlier. Revenue edged up to $2.19 billion from $2.15 billion last year.

The results topped Wall Street estimates for earnings of $1.02 a share on sales of $2.16 billion, according to analysts polled by Thomson Financial.

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