Earnings Preview: Altria Group

RICHMOND, Va. (AP) -- Altria Group Inc., parent of the biggest U.S. cigarette maker, Philip Morris USA, should give investors a sense of whether its top-selling Marlboro brand can keep its command of the market when it releases fourth-quarter and year-end financial results before the stock market opens Thursday.

WHAT TO WATCH FOR: The company continues to focus its efforts on building its premium Marlboro brand which has been under pressure from competitors and lower-priced cigarette brands as consumers face economic challenges and unemployment remains high.

The brand sold for an average of $5.79 per pack during the last quarter, compared with an average of $4.24 per pack for the cheapest brand.

Those challenges are in addition to the tax hikes, smoking bans, health concerns and social stigma that have made the cigarette business tougher. Meanwhile, the industry continues to raise prices despite falling cigarette volumes.

In the third quarter, the top-selling Marlboro brand gained 1 percentage point of market share to end up with 42.7 percent of the U.S. market. Marlboro's shipment volume increased 1 percent to 28.9 billion cigarettes.

The Richmond, Va., company has introduced several new products with the Marlboro brand, often with lower promotional pricing. They include "special blends" of both menthol and non-menthol cigarettes to try to keep the brand growing and steal smokers from its competitors, who also have fought cigarette sales declines with promotional prices.

Altria recently introduced Marlboro NXT — a cigarette that can be switched to menthol by crushing a capsule in the filter. And it says it has a pipeline of innovative products to supplement the Marlboro brand moving forward.

Altria and other tobacco companies also are looking for growth from cigarette alternatives such as cigars, snuff and chewing tobacco. So analysts will want to see how Altria's Black & Mild cigars and Copenhagen and Skoal smokeless tobacco products, as well as Marlboro Snus, perform.

Altria also owns a wine business, holds a voting stake in brewer SABMiller, and has a financial services division.

As the company anticipates volume declines in its core cigarette business, it's also cutting costs. After completing a $1.5 billion multi-year cost savings program last year, Altria rolled out a plan to cut $400 million in "cigarette-related infrastructure costs" by the end of 2013.

WHY IT MATTERS: Increased spending on premium brands like Marlboro could signal consumers are adjusting to paying more for cigarettes following federal and state tax increases.

WHAT'S EXPECTED: Analysts expect Altria to earn 55 cents per share on revenue of $4.35 billion, according to FactSet.

LAST YEAR'S QUARTER: Altria reported adjusted net income of 50 cents per share on revenue of $4.34 billion. Figures for both periods exclude excise taxes the company passes through to the government.

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Michael Felberbaum can be reached at http://www.twitter.com/MLFelberbaum .