Altria Group Inc.’s (MO) first-quarter earnings rose 38% amid prior-year charges as the maker of Marlboro, Parliament and other cigarettes saw revenue increase.

Results topped analysts’ expectations, and Chairman and Chief Executive Michael Szymanczyk said, “We continue to be pleased with the performance of our tobacco companies’ brands, particularly Marlboro and Copenhagen. Marlboro achieved record retail share results in the first quarter, and Copenhagen regained its position as the largest smokeless tobacco brand, as measured by retail share.”

Shares of Altria, which affirmed its 2010 guidance, dropped 0.6% to $21.05 premarket. As of Tuesday’s close, the stock had risen 27% in the past year.

The tobacco industry has seen the number of cigarettes sold continue to slide. In late March, company officials stood before a U.S. Food and Drug Administration panel defending menthol cigarettes, which could face increased regulation. The FDA last year banned flavored cigarettes, saying they lure children to smoke.

The parent company of Philip Morris USA reported a profit of $813 million, or 39 cents a share, up from $589 million, or 28 cents a share, a year earlier. Excluding restructuring and acquisition charges, among others, earnings from continuing operations rose to 42 cents from 39 cents.

Overall revenue jumped 27% to $5.76 billion. Excluding excise taxes, sales increased 3.6% to $3.95 billion.

Analysts polled by Thomson Reuters had most recently forecast earnings of 40 cents on $3.83 billion in revenue excluding excise taxes.

Cigarette volume decreased 0.7% as wholesalers and retailers last year depleted their inventories in anticipation of an increase in federal excise tax, which happened April 1, 2009. In the second quarter of last year, retailers rebuilt their inventories.

Volume of the company’s smokeless products rose 22%.

By Dow Jones, Online.wsj

A Florida judge reduced an almost $300 million verdict against Altria Group Inc.’s Philip Morris USA unit to $38.9 million in a lawsuit brought by a former smoker who suffers from emphysema.
“The court found that the jury’s verdict was grossly excessive and unsupported by the evidence presented at trial,” the cigarette maker said yesterday in an e-mailed statement.

A Fort Lauderdale jury last year awarded Cindy Naugle $56.6 million in compensatory damages and $244 million in punitive damages. The jury found Naugle was 10 percent responsible for her injuries and reduced the compensatory damages by that amount.

Naugle started smoking in 1968 when she was 20 years old. Bob Kelley, a lawyer for Naugle, said in a phone interview that he will appeal the judge’s decision.

Philip Morris also said it will appeal, saying that no damages were warranted.

The suit was one of about 4,000 filed after a 2006 Florida Supreme Court decision decertifying a statewide class action. The court allowed smokers to sue individually and extended the time for them to do so. The $300 million award was the largest tobacco verdict in Florida since the Supreme Court decision.

By Edvard Pettersson, Businessweek

SAN FRANCISCO — While the second major snow storm in a week hit the eastern U.S., leading retailer and supplier executives in the convenience store channel met to discuss the industry’s future Tuesday afternoon here at NACS’ second annual Leadership Summit.
The two opening speakers gave very upbeat and hopeful presentations to kick off the conference on a high note.
Mike Szymanczyk, chairman and CEO of Altria Group, opened the first general session by noting “many of the perceived barriers to success in the tobacco category could be viewed as opportunities.”

Szymanczyk acknowledged retailers worries about rising taxes on tobacco and new FDA regulation. But he noted that too many take a narrow view of the category and focus just on the large cigarette segment and don’t appreciate the sales and profit gains being achieved in other tobacco products (particularly smokeless and machine-made large cigars). He pointed to Apple Computers as an example of a company that was mired in a challenging computer market until it redefined its market as the “digital lifestyle” and created a host of success products, from the iPod to the iPhone to the iPad.

“If all we see when we look at tobacco is new taxes and FDA, we’d be letting a lot of opportunities pass us by,” said the CEO of the largest tobacco supplier. He noted while the cigarette category has been declining by 2-4 percent per year, the smokeless and cigars categories have grown by 12 percent per year in average sales per store over the past five years. Indeed, total tobacco poundage sold declined by only 1 percent in the past five years, said Szymanczyk.

On top of that, the growth in the OTP category has resulted in tobacco makers providing an increasing diversity of new products for adult tobacco users. “We need to expand our view to include existing tobacco user preferences in the OTP category,” he added.

He also presented an interesting view of industry profits during these difficult economic times. Last year, he said, tobacco profits among manufacturers were up 2 percent and for retailers it was even higher. “Compare that to the banking and auto industries,” said the CEO. “While other industries were getting bailouts, tobacco was contributing even more to tax revenues.”

Szymanczyk was confident that the total tobacco category will grow and that convenience stores’ portion of total tobacco sales will increase from its current 67 percent share.

Following Szymanczyk, Alain Bouchard, president and CEO of Alimentation Couche-Tard, North America’s second largest convenience store chain, gave an equally passionate, yet self-effacing vision of the future. “My credentials as a visionary are not the greatest,” began Bouchard. “We do everything in our power not to guess at the future.”

He went on to explain: “when you analyze consumers regularly over a long time, you get a feel for what is coming … it all starts at the store and what the consumer does when he or she enters the store.”
Couche-Tard has grown into a $16 billion, 6,000-plus convenience store retailer through three major strategies, according to Bouchard. The first is understanding the customer. The retailer views every market as local and invests in sophisticated measurement and analysis in each of its 11 geographic divisions, followed by constant exchange of best practices between divisions.

The second strategy is management discipline. The retailer has historically maintained a strong balance sheet and is very conservative about taking on debt. In addition, despite the many acquisitions made, Couche-Tard is known for its rigorous acquisition strategy, said Bouchard.

And finally, Bouchard cited the retailer’s people. “We believe in utilizing our human resources. We are highly decentralized which leads to an extremely motivated and enthusiastic staff.”

Bouchard added, “Our vision is one of unlocking the human potential in our people through training and empowering them. Where else can you be 25 years old and running a $10 million business?”

NACS chairman Jay Ricker, who is also president of Ricker Oil Co. based in Anderson, Ind., introduced the two speakers and noted this year’s NACS Leadership Forum was focused on two categories that are extremely important to convenience stores: tobacco and foodservice.

NACS Leadership Forum continues Wednesday and Thursday in San Francisco.

By Don Longo, Csnews

Richmond Metropolitan Habitat for Humanity got the go-ahead yesterday from Richmond — and a commitment of $225,000 from the city, the largest to date — for its first mixed-income community.

The Pillars of Oakmont is a 15-home community that will be built at T and 33rd streets in Richmond’s East End near Armstrong High School. The units will be energy-efficient row houses sold at different price points based on the income of the buyer.

It is the first mixed-income Habitat-built community for the region and possibly the country.

“After waiting, hoping, dreaming and fundraising, we just got the green light,” said Leisha G. LaRiviere, president and chief executive officer of Richmond Habitat.

The city is contributing funding through the Department of Housing and Urban Development’s Home Program and the city’s Capital Improvement Plan.

Altria Group Inc., The Altria Foundation, Philip Morris USA and the Altria Companies Employee Community Fund are major partners, contributing a combined $120,000 to the $4 million project.

An investment pool of national banks is providing a $1 million loan through Habitat for Humanity International.

Fulton Bank is extending a $750,000 line of credit. “We’re happy to be part of the vision — a bold project for Habitat for Humanity,” said Oliver Way, president of the Central Virginia region for the Lancaster, Pa.-based bank.

Williams Mullen law firm is providing free legal service on the project.

Twelve units will be sold to lowand middle-income Habitat clients at discounts, starting in the $90,000 range. Three others will be sold at market value, ranging most likely from $175,000 to $190,000.

Buyers of the homes sold at market value will need to obtain their own funding.

However, Habitat is offering $10,000 to be applied to the mortgage, down payment or closing costs to buyers who make 60 percent to 80 percent of area median income. The median income, with half earning less and half more, is $73,200 in Richmond. A family of four could make as much as $58,550 to qualify.

The city inspector is supposed to meet Habitat officials at the site this morning to begin work on the project. “Everyone is rolling,” LaRiviere said.

The development is expected to be completed in July. “We’re looking for thousands of volunteers,” LaRiviere said. The first volunteer workday is March 31.

By Carol Hazard, Timesdispatch