ALTRIA GROUP, INC. Quarterly Report for Q1 Ended Mar 31, 2010

Summary

Altria Group, Inc. (MO) reported a strong first quarter for 2010, with net earnings increasing significantly to $813 million, or $0.39 per diluted share, up from $589 million, or $0.28 per diluted share, in the same period of 2009. This growth was primarily driven by higher operating income across its key segments, particularly cigarettes and smokeless products, as well as increased earnings from its equity investment in SABMiller. The company also benefited from lower interest expenses due to the elimination of certain acquisition-related financing fees and a lower effective tax rate. Despite a decline in net revenues for the financial services segment, the overall increase in profitability was robust. Altria reaffirmed its full-year 2010 EPS guidance, anticipating continued growth. The company's financial health appears stable, with adequate liquidity and access to credit lines to meet its obligations, although it continues to navigate significant regulatory and litigation risks inherent in the tobacco industry.

Key Highlights

• 1Net earnings surged by 38.0% to $813 million compared to the prior year's $589 million.
• 2Diluted EPS increased by 39.3% to $0.39 per share, reflecting improved operational performance.
• 3The cigarette segment saw a substantial net revenue increase of 31.5% to $5.12 billion, driven by price increases following the April 1, 2009 federal excise tax hike.
• 4Smokeless products segment net revenues grew by 27.9% to $381 million, aided by higher volumes and reduced promotional costs.
• 5Operating companies income for the smokeless products segment experienced a significant turnaround, increasing by over 100% from a loss to $178 million.
• 6Altria reaffirmed its full-year 2010 diluted EPS forecast of $1.78 to $1.82.
• 7The company's cash flow from operations remained strong, at $2.0 billion for the quarter, consistent with the prior year.

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