April 26 (Bloomberg) -- Altria Group Inc., the largest seller of tobacco in the U.S., reported a 3.8 percent increase in first-quarter profit, helped by Marlboro’s market share gain and higher prices.
Net income rose to $973 million, or 48 cents a share, from $937 million, or 45 cents, a year earlier, the Richmond, Virginia-based company said today in a statement. Profit excluding some items totaled 49 cents a share, matching the average of 13 estimates compiled by Bloomberg.
Marlboro, the top-selling U.S. cigarette, increased its share of U.S. smokers after Altria’s Philip Morris USA introduced a new variety, Marlboro Black, in December. Michael Szymanczyk, retiring as chairman and chief executive officer next month, has used cost cuts and cigarette price increases, including two last year, to spur profit growth amid slumping cigarette demand.
“The launch of Marlboro Black was a key contributor to market share gains in the quarter,” Vivien Azer, a Citigroup Inc. analyst in New York, wrote today in a note to clients. “Bigger-than-expected cost savings” helped profit, said Azer, who rates the shares neutral, the equivalent of hold.
Altria’s share of U.S. retail sales gained 0.4 percentage points to 49.4 percent. Marlboro rose 0.1 percentage points to 42.3 percent. The company’s cigar and snuff businesses also boosted market share while cigarette shipments declined 2.6 percent.
Marketing, administration and research costs declined 12 percent to $483 million after Altria said in October it planned to cut 15 percent of its cigarette-related salaried jobs as shipments declined. The company said today it is “on track” to reduce annual costs by $400 million by the end of 2013.
Altria rose 0.8 percent to $31.93 at the close in New York. The shares have gained 7.7 percent this year.
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