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Altria Reports 2013 Third-Quarter And Nine-Month Results; Reaffirms 2013 Full-Year EPS Guidance

Stocks in this article: MO

PM USA’s 2013 nine-month reported domestic cigarettes shipment volume decreased 3.6% primarily due to the industry’s rate of decline and changes in trade inventories, partially offset by retail share gains. After adjusting for changes in trade inventories, PM USA estimates that its 2013 nine-month domestic cigarettes shipment volume was down approximately 4%, in line with the estimated decline rate for total cigarette category volume for the same period. PM USA’s cigarette volume performance for the first nine months of 2013 is summarized in Table 5.

Middleton’s 2013 third-quarter reported cigars shipment volume increased 6.0%. For the first nine months of 2013, Middleton’s reported shipment volume decreased 6.6% primarily due to changes in wholesale inventories and retail share losses. Middleton’s volume performance for machine-made large cigars is summarized in Table 5.

Table 5 - Smokeable Products: Shipment Volume (sticks in millions)
Third Quarter    

Nine Months Ended

September 30,

2013   2012   Change 2013   2012   Change
Marlboro 29,399 28,954 1.5 % 83,953 87,248 (3.8 )%
Other premium 2,016 2,177 (7.4 )% 5,838 6,503 (10.2 )%
Discount 2,702     2,571   5.1 % 7,646     7,290   4.9 %
Total cigarettes 34,117     33,702   1.2 % 97,437     101,041   (3.6 )%
Black & Mild 311 298 4.4 % 874 940 (7.0 )%
Other 9     4  




17     14   21.4 %
Total cigars 320     302   6.0 % 891     954   (6.6 )%
Total smokeable products 34,437     34,004   1.3 % 98,328     101,995   (3.6 )%

Note: Cigarettes volume includes units sold as well as promotional units, but excludes units sold in Puerto Rico and U.S. Territories, to Overseas Military and by Philip Morris Duty Free Inc., none of which, individually or in aggregate, is material to the smokeable products segment.

Marlboro’s retail share for the third quarter and first nine months of 2013 was unchanged versus both prior-year periods. Later this month, PM USA will expand Marlboro Edge distribution nationally. Marlboro Edge, part of the Marlboro Black family, offers adult smokers bold, smooth flavor.

PM USA’s total retail share for the third quarter and first nine months of 2013 increased 0.2 and 0.3 share points, respectively, due to retail share gains by L&M in Discount, partially offset by share losses on other portfolio brands. PM USA’s cigarette retail share performance is summarized in Table 6.

In the machine-made large cigars category, Black & Mild’s retail share for the third quarter and first nine months of 2013 decreased 1.1 and 1.6 share points, respectively. Middleton’s retail share performance is summarized in Table 6.

Table 6 - Smokeable Products: Retail Share (percent)
Third Quarter       Nine Months Ended

September 30,

2013   2012  




2013   2012  




Marlboro 43.7 % 43.7 % 43.6 % 43.6 %
Other premium 3.1 3.2 (0.1) 3.1 3.3 (0.2)
Discount 3.9     3.6     0.3 3.9     3.4     0.5
Total cigarettes 50.7 %   50.5 %   0.2 50.6 %   50.3 %   0.3
Black & Mild 29.5 % 30.6 % (1.1) 29.2 % 30.8 % (1.6)
Other 0.2     0.2     0.2     0.2    
Total cigars 29.7 %   30.8 %   (1.1) 29.4 %   31.0 %   (1.6)

Note: Retail share results for cigarettes are based on data from IRI/MSAi, a tracking service that uses a sample of stores and certain wholesale shipments to project market share and depict share trends. Retail share results for cigars are based on data from IRI InfoScan, a tracking service that uses a sample of stores to project market share and depict share trends. Both services track sales in the Food, Drug and Mass Merchandisers (including Wal-Mart), Convenience, Military, Dollar Store and Club trade classes. For other trade classes selling cigarettes, retail share is based on shipments from wholesalers to retailers (STARS). These services are not designed to capture sales through other channels, including the internet, direct mail and some illicitly tax-advantaged outlets. Retail share results for cigars are based on data for machine-made large cigars. Middleton defines machine-made large cigars as cigars, made by machine, that weigh greater than three pounds per thousand, except cigars sold at retail in packages of 20 cigars. Because the cigars service represents retail share performance only in key trade channels, it should not be considered a precise measurement of actual retail share. It is IRI’s standard practice to periodically refresh its services, which could restate retail share results that were previously released in these services.


The smokeless products segment grew its adjusted OCI for the third quarter and first nine months of 2013 primarily through higher pricing and higher volume. USSTC grew Copenhagen and Skoal’s combined volume and retail share in both periods.

The smokeless products segment’s 2013 third-quarter net revenues increased 11.0% primarily due to higher volume and higher pricing, partially offset by higher promotional investments. For the first nine months, the segment’s net revenues increased 7.2% primarily due to higher volume and higher pricing, partially offset by higher promotional investments and unfavorable mix due to growth in products introduced in recent years at a lower, popular price. For the third quarter and first nine months of 2013, the smokeless products segment’s revenues net of excise taxes increased 9.8% and 6.6%, respectively.

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