Altria Company

How Altria’s increase in dividends per share on wheels around August / September period, such as back-to-school season. Looking back on it we want our teachers taught us about the abundant economic model, like the tobacco industry, and not to demonize them to provide legal product that consumers wanted.

Altria Group continues to produce consistent performance for its shareholders, which probably explains why she can easily pay about 80% of its adjusted earnings per share as a dividend and buy back shares on the open market. Altria able to smoke tobacco product segments (Philip Morris USA and John Middleton cigars collectively) to maintain a stable supply volume compared to the previous quarter of the year. The most recognizable and profitable product Atria cigarettes are Marlboro. Marlboro cigarette volume increased by 1% in the same period previous year, and it was supplemented by 14% increase from the portfolio of Philip Morris USA cigarette discount level and partially offset by 8% decrease in volumes from other brands PM U.S. premium. Growth of Marlboro has been higher than in the U.S. tobacco market and let her pick 100bp market share. This allowed the smoke to state the product line to create a 3.2% increase in net sales and a 4.3% increase in operating profit in Q3 2012 compared to Q3 2011.

Smokeless tobacco Altria segment enjoyed strong revenue and profit growth compared to smoke in state tobacco segment. All smokeless tobacco volume grew by 6% during the quarter on the strength of new products introduced by the company recently branded Copenhagen. Copenhagen volume increased by 12.1% compared to the same period last year and Skoal saw its volume will increase by 2.8%. This growth was able to offset the decline in other areas of the product portfolio in the UST. Revenue grew by 2.5% and the separation from the positive operating can use its operating profit to grow by 3.3% in the period. U.S. market share of smokeless tobacco increased by 40 basis points, as a 230bp increase in market share in Copenhagen offset the decline in market share Skoal and other smokeless tobacco products in the product portfolio of the U.S. smokeless tobacco.

Fastest growing segment of Altria is its smallest segment. Wine segment enjoyed a 3.7% increase in cases shipped and higher prices enabled this segment to generate a 6.3% increase in revenue in Q3 2012 versus Q3 2011. This segment from the positive to use the operating during the quarter to generate a 8.3% increase in operating income for the quarter and 8.6% year-to-date. Although, Columbia Crest shipment volumes declined by 8.2% compared to last year in the quarter and 12% year-to-date, this decline was more than offset by an increase in its supply of Chateau Ste. Michelle wine and other products. Chateau Ste. Michelle enjoyed 16.4% growth in the fourth quarter and 8.3% growth year-to-date and other wine division savored 1.2% growth in the fourth quarter and 11.7% growth year-on- date.

Altria also owns Philip Morris Capital Corporation, which is its leveraged lease and direct finance lease portfolio. PMCC was formed in 1982 and is running off. Portfolio saw a 4.8% decrease in the adjusted operating income by $ 35 million decrease in allowance for loan losses in the third quarter of 2011, which favorably impacted OCI this year, partially offset by $ 33 million in compensation for the third quarter of 2012 related to lease investment PMCC with American Airlines, Inc Altria also saw a 10.6% increase in its equity income from its share in several SABMiller (SBMRY.PK).

The company took $ 874M pre-tax charge for the early repayment of $ 2B of its two higher interest expense senior unsecured medium term notes as part of the tender offer in September. This competition was held after the company raised $ 2.8b in lower cost of debt and was also able to push the maturity of the bonds. In addition to increasing its dividend per share by 7,3%, Altria repurchased $ 260M worth of its shares during the quarter and increased its share repurchase program to $ 500M.

In conclusion, we are pleased with the performance from Altria Group. Altria proved to be a solid high dividends agricultural company and champion the dividend growth in quantitative terms and quality. We like the fact that tobacco is a cash generator and does not require much in the way of capital expenditures. This allows Altria Group to service their debt, pay dividends, and repurchase shares and to reinvest in the business. Altria Chairman and CEO Michael Szymanczyk resigned from the company after 23 years, including 12 as president and CEO of Philip Morris USA and we do not believe that the company will get hit with its new chairman and chief executive officer Martin Barrington.

Additional disclosure: This article was written by an Saibus analyst Research. Saibus research has not received compensation, directly or indirectly, for the expressing the recommendations in this article. We have no business relationship with any company whose stock is mentioned in this article. Under no circumstances must this report be considered an offer to buy, sell or subscribe for securities trading or other tools.


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