Altria’s 3Q2005 net income has increased by 9% to USD 1.38 per share, exceeding market expectations of USD 1.33/share. The company has upped the low end of its FY2005 forecast. Altria owns a 78% stake in Philips Morris CR. The 3Q report mentioned that international cigarette shipments rose by 9% yoy due to gains in the CEE region. Shipments in the Czech Republic grew by 0.2% yoy, which is certainly a better result than the drop of 2.3% yoy in 1H05. In line with expectations, PMCR’s market share dropped but Altria failed to specify by how much. Despite the short-term environment being negative for PMCR due to rising excise tax and cheap imports, production optimization is helping the company to continue to be a dividend-attractive stock. We expect 8% and 9% dividend yields in 2006 and 2007 respectively and therefore view PMCR as an attractive stock in an increasingly risk-averse environment.