Reynolds' Results Distorted by "Unique Dynamics

Source from:  tr.itsmyiq.com Jul 26, 2007 07/27/2007

Reynolds American Inc. reported operating income of $595 million in the second quarter of 2007, down from $616 million in the 2006 second quarter. Net sales were $2.35 billion during the quarter, compared with $2.29 billion a year earlier. While Reynolds' results fell short of analysts' expectations, company officials stressed that quarter-to-quarter comparisons don't fully reflect RJR's progress in strengthening its brands and its business due to the unique market dynamics in 2006. "R.J. Reynolds' volume and earnings for the second quarter of 2006 were inflated by a build of about 1 billion units of undiscounted wholesale cigarette inventory, which sold through to retail during the second half," said President and Chief Executive Officer Daniel Delen. "The significant quarterly fluctuations resulting from these dynamics inflated earnings during the first half of 2006 and had the opposite effect in the second half of the year." Enditem