Altria Group Inc.'s (MO) first-quarter net income plunged 77% due to prior-year earnings from its spun-off international operations, and the company reported a 14% slump in cigarette volume amid higher excise taxes.

The cigarette maker, which reiterated its 2009 profit view, said that its Marlboro brand gained market share. Altria recently acquired smokeless tobacco maker UST Inc. and said that recent price promotions in parts of the country on its Copenhagen and Skoal brands also helped share growth in the smokeless market in the Southeast. The moves imply fresh competition for Reynolds American Inc. (RAI), which sells smokeless tobacco products like discount brand Grizzly through its Conwood unit.

Altria shares were recently up 0.7% to 16.81. Credit Suisse said the share gain for Marlboro was a positive factor, although overall volume declines appeared to be worse than investors may have been expecting. Earnings came in ahead of Wall Street's consensus estimate. Reynolds American's stock was down 1.3% to 38.94.

Cigarette makers raised prices to offset a recent excise tax hike and are expanding their smokeless tobacco offerings as Americans continue to puff less. Fitch Ratings recently said the declines could accelerate, with price hikes cutting U.S. volume up to 7%, putting total volume declines this year as high as the low-double digits on a percentage basis.

The maker of Marlboro cigarettes and other tobacco products reported net income of $589 million, or 28 cents a share, down from of $2.52 billion, or $1.16 a share, a year earlier. Excluding restructuring and acquisition costs, earnings from continuing operations rose to 39 cents from 37 cents.

Revenue excluding excise taxes increased 5.8% to $3.81 billion, mostly owing to the acquisition of UST Inc. Analysts polled by Thomson Reuters most recently were looking for earnings of 38 cents on revenue of $3.99 billion.

U.S. market share for Altria's main Marlboro brand rose to 42.4% from 41.9%, while the company's total market share fell 0.3 percentage point to 50.9%.

At its U.S. cigarette business, revenue excluding excise taxes fell 6.6%, primarily on lower volume. The drop would have been 5.7% excluding impacts from retailers letting inventory fall ahead of the April 1 tax hike.

At its smokeless tobacco unit, which includes UST's Copenhagen and Skoal brands as well as Marlboro brands, volume fell 5.3%, and the segment posted an operating loss amid $128 million in acquisition-related charges and discounts to promote UST brands.

-By Tess Stynes and Anjali Cordeiro, Dow Jones Newswires; 201-938-2473; tess.stynes@dowjones.com