Altria sees close of Sampoerna bid on May 18

Altria sees close of Sampoerna bid on May 18

Christina Cheddar Berk, Dow Jones/New York

Altria Group Inc. Chief Financial Dinyar Devitre said on Wednesday Philip Morris International expects to close its tender offer for PT Hanjaya Mandala Sampoerna on May 18.

Philip Morris International, which makes Marlboro cigarettes, announced its plans to acquire the Indonesian cigarette maker in March, and began the tender offer on April 18.

Earlier, Altria, which also is the parent of Philip Morris USA and the majority owner of Kraft Foods Inc., reported first- quarter net income rose 18 percent to US$2.6 billion, or $1.25 a share, from $2.19 billion, or $1.07 a share, a year ago.

Altria's earnings from continuing operations in the latest period were $2.58 billion, or $1.24 a share, compared with $2.19 billion, or $1.07 a share, a year ago.

On this basis, Altria's earnings were one cent higher than analysts were expecting, according to Thomson First Call.

Revenue rose 8.7 pecent to $23.62 billion from $21.72 billion last year, including favorable currency exchange of $741 million.

The company expects Philip Morris International volume to rise 1 percent to 2 percent this year, excluding acquisitions and the benefit of a one-time inventory sale in Italy.

"We're confident the momentum should improve as the year unfolds," said CFO Devitre.

Operating income at Philip Morris International is projected to grow at "double-digit" rates this year, assuming current exchange rates, he said.

This forecast comes against the backdrop of continuing challenges in Germany. During the first quarter, the cigarette market in Germany fell 20 percent, Devitre said. However, including other tobacco products, the market was down a "more modest" 8 percent, he said.

The German cigarette market has been hurt by higher taxes and the introduction of other types of tobacco products that are taxed at lower rates than cigarettes.

Philip Morris's cigarette volume in Germany fell 22 percent and its market share declined 0.9 share points to 36.4 percent, Devitre said. Responding to the shift in consumer behavior, the company has been selling other types of tobacco products in this market.

"Assuming there are no further tax and price increases on cigarettes in 2005, the German cigarette market decline should moderate," Devitre said.

At Altria's Philip Morris USA unit, operating income is expected to rise in the "low-to-mid single digits" this year.

According to Devitre, fundamentals at Philip Morris USA are "solid." He said the company continues to expect "moderate growth" in retail share.

Altria has reiterated its forecast for 2005, which calls for earnings from continuing operations of $4.95 to $5.05 a share, compared with $4.57 a share last year.

Altria's forecast also assumes current foreign-exchange rates and about 12 cents a share in restructuring charges at Kraft.

The company has not included the impact of any acquisitions or asset sales in the forecast, including the expected acquisition of Sampoerna.