Reynolds' EPS Increased - with a little Help From Gallaher

Source from:  tr.itsmyiq.com May 1, 2008 05/04/2008

R.J. Reynolds' first-quarter operating income of $415 million was down by 15.0 per cent from that of the previous first quarter as an 11.8 per cent decline in the company's shipment volume and an adjustment to expenses associated with the Master Settlement Agreement more than offset the impact of higher pricing. "It's obvious that our first-quarter performance was weaker than expected and that our efforts to improve promotional efficiency and increase margins were not in sync with the economic and competitive environment," said Daniel M. Delen, R.J. Reynolds' president and chief executive officer. "We are adjusting our programs to make sure that our brands are competitive in the market-place," he said. "We will, however, continue to look for opportunities to increase promotional efficiencies going forward." Results were better at Conwood. Reynolds American Inc. (RAI) reported that whereas moist-snuff category growth continued in the first quarter with a total industry volume increase of 5.5 per cent (about seven per cent after adjusting for one less shipping day in the current year quarter), Conwood's growth was about twice that level, with its Grizzly brand 'continuing to capture more than 40 per cent of total category growth'. Overall, RAI was able to announce a 54.1 per cent increase in reported earnings per share (EPS) for the first quarter of 2008, driven by a $328 million pre- tax gain related to the termination of a Gallaher joint venture. Excluding that gain, first-quarter adjusted EPS was down 9.9 per cent. Enditem