NEW YORK – Tobacco and food giant Altria Group Inc.'s (MO) third-quarter profit rose 6.3 percent, helped by higher equity income from brewer SABMiller (search), favorable foreign exchange rates and a lower tax rate.
The parent company of Marlboro cigarettes and Kraft Foods (KFT) on Tuesday also narrowed its full-year earnings outlook, raising the floor of its previous range.
For the third quarter ended Sept. 30, Altria earned $2.65 billion, or $1.29 a share, compared with $2.49 billion, or $1.22 a share, in the same quarter a year earlier.
Revenue rose 8.5 percent to $22.73 billion from $20.94 billion. A survey of analysts by Thomson First Call had forecast that revenue would decline to $20.67 billion.
Altria spokesman Timothy R. Kellogg said the company doesn't publish operating earnings because there is no consensus among analysts as to what to exclude.
However, Kellogg said he would remove a 2-cents-per-share benefit from a change in tax rate and a 2-cent charge for an asset impairment. These would essentially cancel each other out. He would also take out a gain of 5 cents a share form sales of investments at SABMiller. That reduces the company's earnings to $1.24 a share from $1.29 a share.
Analysts surveyed by Thomson First Call projected, on average, operating earnings of $1.25 a share.
New York-based Altria, which is the world's largest tobacco company and the second largest food company, owns 36 percent of London-based brewer SABMiller plc.
Altria's "domestic tobacco business achieved robust retail share gains, driven by Marlboro," said chief executive Louis C. Camilleri in a prepared statement. "Our international tobacco business delivered strong volume growth of 5.1 percent, driven by gains in most regions, and Marlboro's total international volume increased, with widespread share gains in many key markets."
Altria said Philip Morris USA Inc. (search) , its domestic tobacco business, saw its retail share rise by 1.1 points to 49.9 percent.
The unit's operating income, however, was flat at $1.15 billion for the third quarter, hurt by lower volume and a provision for an individual smoking case in California.
At Altria's international tobacco unit, operating income rose 7 percent to $1.84 billion from $1.72 billion.
Acquisitions contributed to some of the 5.1 percent volume growth touted by Camilleri. Excluding acquisitions, shipments rose 2.9 percent. The gains in a number of markets were partially offset by weakness in France and Germany, where cigarette volumes have fallen.
On Monday, Altria's 85 percent-owned food unit, Kraft Foods Inc., reported third-quarter profits fell 3.8 percent, hurt by higher commodity and marketing costs.
Kraft, which makes Oscar Mayer (search) products and Oreo cookies, reported net earnings of $779 million, down from $810 million a year earlier.
The Northfield, Ill.-based unit is currently in the middle of a restructuring program designed to cut 6,000 jobs and close 20 plants over three years starting last January.
On an operating basis, Altria reported Kraft North America's third-quarter income as $1.07 billion, down 4.4 percent from $1.12 billion a year earlier. Altria said operating profits at the international food division fell by nearly a third to $335 million from $227 million.
Also, operating earnings at Philip Morris Capital fell 27.6 percent to $55 million from $76 million.
For the first nine months of the year, Altria reported net income of $7.5 billion, or $3.62 a share, compared with $7.1 billion, or $3.50 a share, last year. Revenue rose to $67.6 billion from 61.1 billion.
Altria narrowed its target for full-year earnings per share to a range of $4.55 to $4.60, including items, and said it believes it will achieve the high end of that range if current exchange rates are sustained.
Shares of Altria traded Tuesday at $47.35, down 5 cents on the New York Stock Exchange (search).