Altria drops more hints of a split

Wall Street got more hints that Altria Group Inc., owner of the Philip Morris cigarette companies, may be closer to splitting its domestic and international divisions.

Reporting that second-quarter income fell more than 18% on Wednesday, the New York-based company also provided more financial information than usual for its Philip Morris International unit, a signal to analysts that it might be preparing for the long-awaited split.

Altria Chief Financial Officer Dinyar S. Devitre said Philip Morris International was operationally ready to be spun off. He declined to elaborate on timing but said the unit was operating in a more transparent manner by providing results from Philip Morris International’s four regional units.

“That has got nothing to do with any specific actions that we would take or not take in the future with regard to the corporation,” he said. Analysts are looking to an Aug. 29 board meeting for a possible announcement.

Morgan Stanley analyst David Adelman told investors that the increased disclosure pointed to a spin-off.

Philip Morris USA has suffered from declining demand for cigarettes while Lausanne, Switzerland-based Philip Morris International has enjoyed strong growth overseas. Analysts were mixed on the quarterly results but most saw signs that the board could approve the break-up next month.

Net income for the second quarter fell 18.3% to $2.22 billion, or $1.05 a share, from $2.71 billion, or $1.29, a year earlier.

Excluding one-time costs, Altria said earnings per share were up 5% to $1.05. Revenue for the quarter grew to $18.8 billion, up 9.7% from $17.15 billion a year earlier.

Altria’s shares fell 98 cents, or 1.4%, to $70.30.