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NEW YORK -- Altria Group Inc. (MO) said second-quarter net income increased 7.8%, helped by a weak dollar, a favorable tax rate and market share gains for its Marlboro cigarettes.

The parent of cigarette maker Philip Morris and Kraft Foods Inc., Tuesday reported net income of $2.63 billion, or $1.27 a share, up from $2.44 billion, or $1.20 a share, a year earlier.

Results for the latest quarter included 13 cents in charges for restructuring at the Kraft division and for costs related to an agreement Philip Morris International signed earlier this month with European Union regulators that ended a long dispute over cigarette smuggling.

These costs were offset by a benefit of 15 cents a share stemming from a lower tax rate. Additionally, favorable currency exchange lifted profit by a nickel a share.

Year-earlier results included charges of six cents a share for a settlement with tobacco growers and the cost of relocating Philip Morris headquarters to Richmond, Va.

Revenue in the latest period rose 10% to $23.01 billion from $20.83 billion.

"Our domestic and international tobacco businesses performed well and continued to implement effective strategies for long-term growth," Louis C. Camilleri, chairman and chief executive of Altria, said in a prepared statement. "Our domestic tobacco business continued its momentum, with a particularly strong increase in Marlboro's retail share. Our international tobacco business performed well, but continues to face challenges in France, Germany and Italy."

In other geographic regions, Philip Morris International's performance remains strong, Mr. Camilleri noted.

Philip Morris's total retail share grew 1.3 share points to 49.8%, thanks to a 1.8-point share gain in Marlboro. Retail share for both Parliament and Virginia Slims declined slightly, while market share for the Basic discount cigarette brand held steady.

In the food business, "Kraft's quarterly results reflect ongoing challenges, including high commodity costs," Mr. Camilleri said. "However, I remain optimistic that Kraft will achieve better results in the second half and over the long term..."

Kraft, maker of Oreo cookies, Oscar Mayer meats, Philadelphia cream cheese, Monday reported a 26% drop in second-quarter earnings to $698 million, or 41 cents a share. In addition to higher commodity costs, the food giant was hurt by marketing spending, restructuring charges and benefits costs. Kraft also lowered its full-year earnings guidance to a range of $1.55 to $1.62 a share, including estimated asset-impairment charges of 30 cents a share.

Kraft, which is about 84%-owned by Altria, plans to close facilities and cut 6,000 jobs over the next three years.

Altria on Tuesday reiterated its forecast for full-year 2004 earnings of $4.50 to $4.60 a share, saying the latest quarter's tax benefit will offset the impact of the EU settlement and Kraft's revised earnings outlook.