Altria's Future: Remarks by Michael Szymanczyk, Chairman and CEO PM USA and future Chairman and CEO of Altria after the spin-off of PMI on March 28,



March 12, 2008 - Altria's Future: Remarks by Michael Szymanczyk, Chairman and CEO PM USA and future Chairman and CEO of Altria after the spin-off of PMI on March 28, 2008.. Altria Group, Inc. Investor Presentation Concerning Spin-off of Philip Morris International Inc. (PMI) on March 11, 2008. Following the spin-off, we will have greater focus, with most of our corporate resources directed toward building our leadership position in the U.S. tobacco industry. Altria's mission is to own and develop financially disciplined businesses that are leaders in responsibly providing tobacco consumers with superior branded products. Philip Morris USA (PM USA) will be the largest company of Altria with its focus on domestic sales of cigarettes and adjacent products such as moist smokeless tobacco (MST) and Snus. John Middleton, Inc. was acquired in 12/2007 a leader in machine-made cigars such as Black&Mild. PM Capital Corporation is a financial services business and Altria has a 28.6% interest in SABMiller - a beer company. Cigarette industry - this is a very large business with an estimated $70 billion in consumer expenditures in 2007. It is also very profitable with an estimated industry profit pool of $8.8 billion in pre-tax income. PM USA captured approximately 56% of this profit in 2007. Premium brands ( Parliament, Virginia Slims, Basic, L&M) continue to gain share, led by Marlboro. Cigarette volumes continue to decline. PMA USA estimates that industry volumes declined 4% in 2007 versus a historical decline rate of about 2%. For the next few years, PM USA anticipates annual industry volume declines of about 2.5% to 3%. PM USA's brand strength in the cigarette business forms the base for expansion into the growing and adjacency tobacco categories. For example, PM USA is using Marlboro's superior tobacco flavor image and the resources that support the Marlboro cigarettes franchise to create value in new businesses such as MST and Snus. (Nik Modi, a UBS tobacco analyst has stated, "The Marlboro brand name is not as transferable as many originally believed." The guys that know the smokeless tobacco category tell us history clearly shows that it is difficult to extend brands from one category to another.The smokeless tobacco category (STC) (for 2005 STC was a $3.7 billion business) holds great promise for PM USA in the coming years. The combined test market results for the 2-Marlboro products in stores stocking is an estimated 6% share of the STC, after only 7-months into our test markets. While not yet nationally projectable, this result gives us reason for optimism. (We feel in order for PM USA to be a significant player in the STC they'll need to expand through acquisitions e.g., PM-UST, PM-Swedish Match). (Italics=TobaccoWatch.org)Many related news briefs - browse the library - here's one example Philip Morris USA (PM) continues to stumble in the smokeless tobacco arena.. Michael Szymanczyk (TobaccoWatch.org)

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