RJR Shipments Down But Income up

Source from:  tr.itsmyiq.com Oct 26, 2007 10/29/2007

R.J. Reynolds' third quarter cigarette shipment volume of 25.0 billion was down 4.0 per cent on that of the third quarter of last year, while its market share, at 29.0 per cent was down 0.76 share points. However, the company's premium-to-value mix was 62.6 per cent, up almost half a percentage point, and the company's third-quarter operating income of $497 million was up 4.9 per cent. So Daniel M. Delen, R.J. Reynolds' president and chief executive officer, was able to report that "continued gains in total growth-brand share and operating income reflect the strength of our business model. The sustained momentum of our brand-portfolio strategy, coupled with improved pricing and productivity gains, puts R.J. Reynolds on pace to deliver strong full-year results." Camel, Kool and Pall Mall, the company's three growth brands, posted a combined market-share of 13.22 per cent, up 0.59 share points. Delen said that Camel's growth continued to be driven by innovations, and one of those is the smokeless, spitless Camel snus. R.J. Reynolds had expanded its initial Camel Snus two-market test into six additional markets, added Delen. The company was seeing significant interest in the product, which provided adult tobacco users with 'Pleasure for Wherever'. The R.J. Reynolds figures were announced yesterday as part of the third quarter results for Reynolds American Inc (RAI), which declared earnings per share (EPS) of $1.21, up 15.2 per cent on a reported basis and 12.0 per cent on an adjusted basis from those of last year's third quarter results. For the nine-month period, EPS of $3.43 was down 1.7 per cent on a reported basis, mainly due to a 'prior-year tax favorability of $74 million'. But on an adjusted basis, EPS was up 5.5 per cent to $3.43 for the first nine months, because of pricing and productivity gains at R.J. Reynolds and the inclusion of Conwood's strong results. RAI said that it expected strong EPS growth in the fourth quarter and had increased its full-year EPS guidance to $4.55-$4.65. 'That represents year-over-year growth of 11 per cent to 13 per cent,' RAI said. 'The guidance increase was driven by a cigarette price increase announced late in the third quarter.' "Reynolds American's third-quarter and nine-month 2007 earnings demonstrate our commitment to deliver responsible growth through innovation," said Susan M. Ivey, RAI's chairman and chief executive officer. "With operating companies that compete in virtually every tobacco category, Reynolds American is well positioned to drive and benefit from evolving consumer trends." Meanwhile, Conwood's president and chief executive, William M. Rosson, said that his company had continued to deliver strong results with an 18 per cent earnings gain in the third quarter. Compared with the prior-year period, Conwood's adjusted pro-forma third-quarter operating income of $90 million was up 18.4 per cent. Conwood's third-quarter moist-snuff volume of 75.8 million cans was 12.3 percent higher than the prior-year period. Rosson said that the company's 25.95 per cent share of shipments during the third quarter was up a third of a share point as Grizzly's gains more than offset Kodiak's declines. For the nine month period, Conwood's share of 25.80 per cent was more than a full share point higher. Enditem