Altria units set post-spinoff long-term targets

By Brad Dorfman

CHICAGO (Reuters) - Altria Group Inc (MO.N) executives set financial goals for the international and U.S. businesses of the soon-to-be split up company, with Philip Morris International seeing greater earnings growth.

The businesses also forecast $1 billion each in eventual cost savings and stood by prior 2008 earnings forecasts.

"The cost savings were very good news, but just modestly better than the mumblings of what the Street was looking for," said Charles Norton, portfolio manager of Vice Fund VICEX.O. Altria is the largest holding in the fund, with 213,000 shares as of January 31, Norton said.

Altria shares were up 59 cents, or 0.8 percent, at $75.33 on Tuesday afternoon on the New York Stock Exchange.

Philip Morris International expects earnings per share to rise 10 percent to 12 percent annually in the long-term after the cigarette company gets spun off from Altria later this month, it said on Tuesday.

At the same time, Altria said its remaining businesses -- Marlboro cigarette maker Philip Morris USA and a 28.6 percent stake in beer maker SABMiller Plc (SAB.L) -- should post long-term annual earnings per share growth of 8 percent to 10 percent.

The forecasts came at an analysts' meeting where executives disclosed plans for the companies after the March 28 spinoff of Philip Morris International.

The remaining Altria business should provide annual shareholder returns of more than 12 percent, including its dividend, the company said.

Aside from cost savings, that business is also counting on the strength of the Marlboro brand and growth in segments like smokeless tobacco, including through possible acquisitions, said Philip Morris USA Chief Executive Michael Szymanczyk, who will become Altria's CEO.

Unlike other cigarette brands, which are strong in specific regions, Marlboro is "the leading brand in every state and competes in all geographies," Szymanczyk said.

INTERNATIONAL GROWTH

Philip Morris International forecast long-term annual revenue growth of 4 percent to 6 percent and volume growth of 1 percent to 2 percent. By the end of 2010, it expects cost savings of $1 billion and cumulative total cash flow of about $22 billion.

Andre Calantzopoulos, who will be chief operating officer of Philip Morris International, said there are plenty of areas in the world for Philip Morris to grow its business.

"In the international market, there are still more than five out of every six adult smokers who are consuming brands that are not manufactured and sold by PMI," he said. Among large cigarette markets where the company has little or no presence, he cited China, Vietnam, India and Bangladesh.

Philip Morris International plans to spend about $300 million a year on research and development, split evenly between conventional products and new items like the "Heatbar" electronically heated cigarette that is currently being market tested.