Altria Group Inc. (MO), the maker of Marlboro cigarettes, Wednesday posted a 1.5 percent increase in quarterly profit, helped by higher cigarette prices in the United States and higher international shipments.

Earnings from the Philip Morris International (search) tobacco division offset lower-than-expected profit at the company's majority-owned Kraft Foods Inc. (KFT) unit, which has been hit by higher costs for energy, nuts, coffee and other items.

Excluding one-time items, analysts said the company earned $1.32 a share in the second quarter, 2 cents below consensus estimates, although different analysts factored different items into their estimates.

While the company raised its full-year profit outlook, analysts also said that, when one-time items are eliminated, the profit forecast was actually lower.

But even a lower forecast and lower-than-expected earnings did not phase investors, who are focused more on the timing of key legal rulings, and the stock was little changed Wednesday.

Altria management has said resolution of the a federal racketeering case (search) against the tobacco industry, as well as major cases in Florida and Illinois, is needed before it will split Altria into separate companies, which could garner a higher total market valuation than the current Altria.

"The investment thesis on Altria is based more on multiple expansion and value creation activities by management following anticipated legal outcomes than it is based on earnings growth," Rob Campignino, analyst at Prudential Equity Group, said in a research note. He rates Altria stock "overweight," with a $70 price target.

Second-quarter net profit rose to $2.67 billion, or $1.28 a share, from $2.63 billion, or $1.27 a share, a year earlier. Revenue rose 8.3 percent, to $24.78 billion.

Excluding excise taxes collected, revenue rose 6 percent, to $17.33 billion. On that basis, analysts had forecast revenue of $16.87 billion.

Altria shares were up 10 cents at $65.36 around midday Wednesday on the New York Stock Exchange. The stock is up about 7 percent for the year, compared with about 4 percent for top U.S. rival Reynolds American Inc. .

The stock trades at a multiple of about 12.8 times analysts 2005 earnings estimates, while Reynolds American trades at about 11.2 times.

In December, the company's Philip Morris USA unit effectively raised prices on some brands, including Marlboro, for the first time in two and a half years by reducing wholesale discounts.

Last month, it said it would cut back on promotional payments to some retailers on Marlboro and Basic brands, a move that is expected to improve the company's margins.

Still, the U.S. unit shipped 49.3 billion cigarettes in the quarter, up 1.4 percent from a year earlier, and its total U.S. market share edged up to 50 percent. Prices were not as high as some analysts expected.

"PM-USA's profit was slightly lower than we envisioned, despite strong volume, on lower-than-expected price realization, and Kraft profit was weaker than we expected," Judy Hong, analyst at Goldman Sachs, said in a research note.

She has an "outperform" rating on the stock.

The company also raised its full-year profit forecast to a range of $5.00 to $5.05 a share from continuing operations -- 5 cents a share higher than its previous forecast due to the impact of special items.

The items include a tax benefit of 10 cents a share related to Altria's decision to repatriate $6 billion in overseas profits and earnings of 3 cents to 4 cents a share from the company's recently acquired PT HM Sampoerna Tbk business in Indonesia.

The company said its currency exchange benefit will be 7 cents a share less than previously forecast, because the dollar has strengthened against other currencies. It will also see an increase of 1 cent to 2 cents a share in its expected payment for an industry buyout of tobacco farmers.