PM USA's second-quarter 2008 net revenues were $4.9 billion and operating companies' income was $1.3 billion.
PM USA is focused on the domestic sale of cigarettes and adjacent products such as moist smokeless tobacco (MST) and snus.
The U.S. cigarette industry volume continues to decline. Nevertheless, the cigarette industry accounted for an estimated $70 billion in consumer expenditures in 2007 and had an estimated industry profit pool of $8.8 billion in pre-tax income.
Our cigarette product portfolio is led by Marlboro. It is the number one cigarette brand in every state and the number one cigarette brand for men and women across all adult age groups. Marlboro’s share is larger than the combined share of the next ten largest cigarette brands and larger than R.J. Reynolds and Lorillard combined. In the second-quarter 2008, Marlboro gained 0.8 share points versus the prior year period growing to a 41.8 percent retail share, making it both the nation’s largest and fastest growing cigarette brand.
PM USA also has other strong cigarette brands in its portfolio. Parliament, Virginia Slims, Basic and L&M all have areas of regional strength and PM USA continues to support these brands with smart and focused investment spending. Parliament, Virginia Slims and Basic are among the nation’s best selling cigarette brands.
PM USA's parent company and sole shareholder is
Altria Group, Inc., a Virginia corporation whose common stock is traded on the New York Stock Exchange (ticker symbol MO). PM USA provides Altria Group with value over the long-term by focusing on Altria Group's four goals to:
- Invest in Leadership
- Align with Society
- Satisfy Adult Consumers
- Create Substantial Value for Shareholders
PM USA prudently manages its core cigarette business to achieve moderate share and income growth. We also have a disciplined cost management program. One of our objectives is to reduce costs at a rate that exceeds cigarette industry volume declines.
PM USA seeks to expand its cigarette business organically. Line extensions allow the company to meet changing adult smoker preferences, remain relevant in a dynamic marketplace and grow retail share. Another element of our strategy is to strengthen our brand portfolio through innovative, brand-building equity programs.
To be successful in contributing to Altria Group's growth strategy, PM USA needs to grow revenue in a manner consistent with business strategies that have made it a successful company. We are taking a step by step approach, looking at adjacent products that build on what we know:
- Manufacturing and marketing premium, high-quality tobacco products;
- Building relationships with adult tobacco product consumers;
- Building well-known brands such as Marlboro;
- Ensuring availability of our products at retail locations.
Looking for opportunities that build on our strengths as a cigarette company will increase the likelihood of our success in future endeavors.
With a logical, deliberate and progressive series of events, PM USA plans to expand from our core cigarette business in a way that limits risk and grows revenue over the long term.
PM USA's brand strength in the cigarette business forms the base for expansion into adjacent tobacco categories. For example, PM USA is using Marlboro's superior tobacco flavor image and resources that support the Marlboro cigarette franchise to create value in new businesses such as MST and snus.
