Earnings Preview: Reynolds American to Report 1Q Results

Source from:  biz.yahoo.com NEW YORK (AP) Monday April 28 04/29/2008

Analysts expect Reynolds American to post a profit of $1.15 per share in the 1st quarter Reynolds American Inc., the second-largest U.S. tobacco company, is scheduled to report its first-quarter results Wednesday. The following is a summary of key developments and analyst commentary for the period. OVERVIEW: Excluding one-time costs, the company's fourth-quarter profit of $1.15 per share met analyst estimates. However, sales were slightly weaker than expected. Reynolds announced in February that group president Jeffrey Eckmann will retire on May 1. Eckmann will be replaced by Jeffrey Gentry, an executive vice president with the company's largest subsidiary, R.J. Reynolds Tobacco Company. Reynolds said it will receive a $300 million benefit in the first quarter as compensation for a dissolved partnership with Gallagher Ltd. The companies had teamed up to market Reynolds brands in Italy, France and Spain. In March, rival and U.S. leader Altria Group Inc. completed the spinoff of its Philip Morris International business. BY THE NUMBERS: Analysts polled by Thomson Financial expect Reynolds to report a profit of $1.15 per share on $2.15 billion in revenue. ANALYST TAKE: Goldman Sachs analyst Judy Hong said Reynolds' Camel brand took a slightly larger share of the market, but that was offset by weaker results of other brands. She said Reynolds implemented bigger price increases than its competitors did. Overall, Hong wrote, the Winson-Salem, N.C., company's market share fell to 28.1 percent in March, from 29.3 percent in the same month of 2007. WHAT'S AHEAD: Reynolds says it is focusing on developing its Camel, Kool and Pall Mall brands, along with getting greater sales of "super premium products." The company is also planning to increase sales of snuff and smokeless tobacco, and sales to international markets. STOCK PERFORMANCE: Shares reached an all-time high of $72 in January, but slid 10.5 percent during the quarter. The stock fell to a new low of $57.12 earlier this month, and closed Friday's trading at $59.50. Enditem