RAI Reynolds American (delisted)

Altria Group Inc. (MO), through its unit - Altria Client Services Inc. reported that it spent $2.62 million during the second quarter 2011 on issues related to the budget, taxes and other matters. The lobbying charges moved up 12.9% from $2.32 million during the second quarter of 2010, but shrunk 8.4% from $2.86 million in the first quarter of 2011.

According to the filing with the House clerk's office on July 20, Altria lobbied only the Congress from April through June.

Further, the lobbying charges include the issue related to the Block Aircraft Registration Request program. This program was started by the Congress in 2000, which gives flight-tracking information to the company when it wants to be protected from public view for commercial and privacy purposes, as well as security reasons. However, the program ended in June 2011, which was again revived in August by the Federal Aviation Administration (FAA) but it limited the security concern.

Other issues Altria lobbied on included funding for the Centers for Disease Control and Prevention, intellectual property protection, health care reform, taxes on tobacco products and aviation safety.

The maker of top-selling Marlboro cigarettes and other tobacco products, Altria also posted adjusted earnings of 53 cents per share in the second quarter of 2011 on July 20, which were up 6.0% from the prior-year quarter and in line with the Zacks Consensus Estimate.

Altria’s revenue for the Cigarettes segment increased 2.1% in the quarter, while it increased 3.6% for the Smokeless products. Net revenue for the Cigars segment declined 3.9% year over year in the second quarter of 2011, while it surged 9.4% for the Wine segment based on higher premium shipment volume.

In the second quarter of 2011, Altria achieved cost savings of $80 million and expects to achieve at least $30 million in additional cost savings by the end of 2011.

Altria also repurchased 22.8 million shares at an average price of $27.07 aggregating $616 million during the second quarter, as part of its previously announced $1 billion one-year share repurchase program.

In August, the board of Altria also planned to raise its regular quarterly dividend by 7.9% to 41 cents per share. The quarterly dividend will be paid on October 11, 2011 to shareholders of record as of September 15, 2011. The new annualized dividend rate is $1.64 per common share, and the dividend increase from 38 cents per share is also consistent with Altria’s dividend payout ratio target of approximately 80% of its adjusted earnings per share.

Altria is well positioned to grow in the smokeless tobacco segment, with its new product launches in addition to its strong product mix and pricing power. However, on the flip side, Altria’s cigarettes segment, which currently contributes over 70% of tobacco sales in the U.S., is seeing persistent volume declines due to growing health consciousness among consumers, a ban on public smoking as well as high excise taxation on tobacco products and other legislative controls.

Management at Altria also stated that the business environment for 2011 is expected to remain challenging. This is because adult consumers remain under economic pressure and face high unemployment.

Headquartered in Richmond, Virginia, Altria engages in the manufacture and sale of cigarettes, smokeless products, and wine in the United States and internationally. It competes with Reynolds American Inc. (RAI) and Lorillard, Inc. (LO).

 
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