Altria Says Marlboro Moving in the Right Direction

RICHMOND, Va. -- Despite several reports that tobacco margins have been steadily declining for retailers, Altria Group Inc. Chairman and CEO Martin Barrington responded today that the company aims to "maintain a terrific relationship" with operators and give them options through its MLP and Marlboro Flex programs.

"Overall, our retailers will tell you we do a pretty good job for them," Barrington said during the company's 2012 fourth-quarter earnings call this morning.

The chief executive noted that cigarettes are a big driver of retail traffic and will remain an important part of the mix regarding in-store merchandise sales, even as some retailers expand into foodservice to offset alleged declining cigarette margins.

Focusing on its marquee brand Marlboro, Barrington said the brand is "moving in the right direction." Marlboro's share of the retail cigarette market reached 42.6 percent in the fourth quarter, a 1-percent increase vs. the same period last year.

During the conference call, Barrington also addressed the fastest growing sector of the tobacco market: electronic cigarettes. Although some industry insiders expected Altria to announce an acquisition of an e-cigarette company as early as today, no such announcement was made.

However, Barrington said e-cigarettes are an "opportunity we're monitoring carefully. It's still a new phenomenon."

Altria earned $4.18 billion for its latest quarter, compared to a $3.38 billion profit during 2011's fourth quarter. This latest earnings figure slightly surpassed estimates put forth by Wall Street analysts.

Net revenues for smokeable products increased by 2.4 percent in the fourth quarter, primarily due to higher list prices, the company said. Meanwhile, the Copenhagen and Skoal brands led Altria's smokeless segment to report a 7.2-percent net revenue increase for the quarter.

"Despite a continuing, challenging external environment, our tobacco operating companies' premium brands had an excellent year as our companies continued investing in their long-term success," said Barrington.