Earnings surged 34% in

Altria's

(MO) - Get Report

first quarter, thanks to a billion-dollar tax settlement with the U.S. government. Excluding that and other one-time items, Altria's earnings fell slightly from a year ago.

The tobacco giant, which also controls

Kraft

( KFT), earned $3.48 billion, or $1.65 a share, in the quarter, compared with $2.6 billion, or $1.25 a share, a year ago. Sales rose 3.1% to $24.36 billion.

On a continuing operations basis that subtracts the tax-settlement gain, Altria earned $1.19 a share in the most recent quarter. While Altria's convoluted financial statements resist deductive logic, that number appeared to miss the Thomson First Call consensus estimate of $1.28 a share for the quarter.

The comparable earnings metric in the year-ago quarter was $1.24 a share.

For the year, Altria reiterated guidance for earnings of $5.25 to $5.35 a share on a continuing-operations basis. Analysts surveyed by Thomson First Call were forecasting earnings of $5.28 a share for the year.

"Our domestic tobacco business delivered strong share and income gains in the first quarter of 2006, reflecting the strength of the Marlboro brand," Altria said. "Our international tobacco business achieved solid volume and share gains in many markets, but as previously anticipated, income growth was adversely impacted by a combination of factors, including unfavorable currency movements, lower results in Spain and a difficult comparison to the prior year."

"In our food business, Kraft continued to make progress against its long-term objectives, achieving both solid organic revenue growth and stronger results from operations. Although commodity costs and the European Union business remain challenging, Kraft expects its momentum to build in 2006."

The stock added 31 cents to $69.27 in premarket trading.