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In the US, third-quarter shipments declined 1 percent to 47.1 billion cigarettes, moderating from a 4.8 percent drop in the first half of 2007. ... Altria Group Inc., the world’s largest tobacco company, said third-quarter profit rose more than analysts anticipated on higher cigarette prices and sales of the top-selling Marlboro brand, spurring the company to raise its forecast for the year.

Profit adjusted for Altria’s spinoff of Kraft Foods Inc. increased 19 percent to $2.63 billion, or $1.24 a share, beating the average estimate of analysts by 7 cents. Revenue rose 8.9 percent to $19.2 billion, New York-based Altria said today in a statement.

Altria’s Philip Morris USA unit raised cigarette prices and reduced discounts on Marlboro and Virginia Slims. Its share of U.S. smokers increased to a record 50.6 percent, led by Marlboro. In international markets, Altria expanded through an acquisition in Pakistan and the introduction of Marlboro Wides in Mexico and clove-flavored Marlboros in Indonesia.

`The company has the ability to raise prices and extend the Marlboro brand because people are addicted to the stuff,’’ Donald Yacktman, who oversees $1.1 billion including Altria shares at Austin, Texas-based Yacktman Asset Management, said Oct. 12.The cigarette maker increased by 15 cents a share its 2007 profit projection. It expects to earn $4.20 to $4.25, up from a previous forecast of $4.05 to $4.10, on a lower tax rate, a weak dollar and improving international tobacco earnings.

Rise in Shares

Altria rose 24 cents to $70.98 at 4 p.m. in New York Stock Exchange composite trading. The stock advanced 7.7 percent since March 30 when the company spun off its 89 percent stake in Kraft. The world’s second-largest foodmaker gained 6.5 percent in the same period.Excluding a factory-closing expense and favorable tax items, profit was $1.21 a share, Altria said. It was expected to earn $1.14 a share, according to the average projections of eight analysts in a Bloomberg survey. Net income a year earlier was $2.21 billion, or $1.05 a share.

In the U.S., third-quarter shipments declined 1 percent to 47.1 billion cigarettes, moderating from a 4.8 percent drop in the first half of 2007. Third-quarter volume fell about 3 percent when adjusted for changes in distributors’ inventories and calendar differences from a year earlier, Altria said.Philip Morris USA reduced a promotional discount by 5 cents a pack to 35 cents on Marlboro, Parliament, Basic and L&M cigarettes on Sept. 10. It also lowered the discount on Virginia Slims by 20 cents a pack and boosted prices of its other brands. That followed price increases in February and December.

Wooing Smokers

Marlboro has increased its U.S. market share in seven of the past 10 quarters, helped by discounts, two-for-one promotions and offers mailed to smokers. Philip Morris USA’s total share has advanced 0.5 percentage point from 50.1 percent two years ago, according to data compiled by Bloomberg.The weaker dollar and higher prices in western Europe, including a third-quarter price increase in France, pushed Philip Morris International’s operating profit up 19 percent to $2.5 billion.

Overseas shipments rose 0.6 percent to 217.2 billion cigarettes on Altria’s first-quarter acquisition of a controlling interest in Lakson Tobacco Co., Pakistan’s second- largest tobacco company. Volume fell 1.9 percent excluding Lakson, Altria said.Profit in the U.S. rose 2 percent to $1.3 billion, hurt by shipment declines and a $22 million expense related to a Philip Morris USA factory closing in Cabarrus County, North Carolina.U.S. and international profit increased faster than expected by Judy Hong, a Goldman Sachs Group Inc. analyst in New York.

International shipments fell more than projected, while the U.S. volume decline was in line with Hong’s expectations, she wrote today in a note.

Into Snuff

As workplace and restaurant smoking bans crimp demand, Philip Morris USA is expanding Marlboro into snuff, a category that’s led by UST Inc., the maker of the Skoal and Copenhagen brands, and growing 6 percent to 7 percent a year, Hong said.The Marlboro brand is expanding overseas. In July, Altria’s Indonesian unit started selling clove-flavored Marlboros. Clove cigarettes, known as kretek, dominate sales in the Southeast Asian nation, the world’s fifth-largest tobacco market.The moves by the U.S. and overseas units signal their strategies once they’re operating independently. Altria Chief Executive Officer Louis Camilleri told investors in August the company will spin off Lausanne, Switzerland-based Philip Morris International.

Camilleri, 52, declined an interview request, Altria spokesman Timothy Kellogg said. The company paid its chief $34 million in 2006.

Share Buybacks

Once separate, the U.S. and international companies may repurchase $30 billion in shares, Erik Bloomquist, a J.P. Morgan Securities Ltd. analyst in London, wrote in a note Oct. 12. He rates Altria as overweight.Devitre told analysts that Altria’s board plans to announce share repurchase plans for the two companies before the spinoff of Philip Morris International. Altria plans to say Jan. 30 when the spinoff will occur.Altria will relocate its corporate headquarters to Richmond, Virginia, the hometown of its U.S. unit. Analysts expect the split in the first half of 2008.