StockCall Scans Altria and Lorillard: Selling Prices Hike, is it a Solution for the Cigarette Makers?

Tue Feb 12, 2013 8:02am EST

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LONDON,  February 12, 2013  /PRNewswire/ --

The United States  cigarette industry faces a number of challenges that have
adversely affected the growth outlook for companies operating in this sector.
These have led to a shrinking market size of cigarette sales by volume over the
past years, and this trend could continue unless the main industry leaders find
apt solutions to the current problems. Altria Group Inc. (NYSE:MO), Lorillard
Inc. (NYSE:LO) and other major industry giants have resorted to increasing
cigarette prices to counter declining revenues. StockCall has taken an interest
in these companies and you can now sign up to download the free technical
research on Altria Group and Lorillard at   

Key threats to the Cigarette Industry

Restrictions already imposed by the FDA under the Family Smoking Prevention and
Tobacco Control Act (the "FSPTCA") enacted in  June 2009; actual and proposed
excise tax increases; bans and restrictions on tobacco use imposed by
governmental bodies and private establishments; other illicit trade practices,
including the sale of duplicate low quality tobacco products by third parties;
and most crucial of all the increasing health awareness are all key threats to
the industry. In addition,  companies  have damaged their brand equity and
hindered revenue growth in the last few years. However, due to heavy brand
loyalty the cigarette industry has extremely low price demand elasticity.

Earnings Figures - Altria Group

Cigarettes sales constitute 70% of the total revenue for Altria Group and
smokeless products constitute 16% roughly. Altria Group reported revenue figure
of  $24 billion  and an adjusted EBITDA figure of  $7 billion  in 2012. The less
sensitivity is likely to keep the revenue forecast in-line, even though unit
sales are likely to decline. The stock however seems on a bullish run.  Sign up
today to read the free research report on Altria Group Inc. at   

Earnings Figures - Lorillard

The rise in net income in the third quarter broke a streak of two consecutive
quarters of year-over-year profit declines. In the third quarter, net income for
Lorillard increased by 6%, while the figure dropped 2.4% in the second quarter
and 10.1% in the first quarter. The company reported revenue increase for two
quarters in a row. In the most recent quarter, sales rose 2.4% year-over-year to
 $1.66 billion. The quarter prior to that that, sales grew by 2.3%. Register to
download the free technical analysis on Lorillard Inc. at   

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