UST Smokeless Volumes up in Second Quarter

Source from:  tr.itsmyiq.com Jul 25, 2008 07/29/2008

UST volume sales of smokeless tobacco during the second quarter to the end of June, at 172.0 million cans, were increased by 1.3 per cent on those of the second quarter of 2007. Sales of premium-price products decreased by 0.3 per cent to 143.2 million cans while sales of price value products increased by 9.7 per cent to 28.8 million cans. Smokeless tobacco net sales decreased 1.3 per cent to $393.7 million while operating profit increased 1.1 per cent to $226.2 million. On an adjusted basis, operating profit increased 0.8 per cent to $228.9 million. "Our sustained investments continue to drive strong moist smokeless tobacco category growth and overall can volume growth for the company," said Daniel W. Butler, president, US Smokeless Tobacco Company (USSTC). "However, our premium volume trend softened in June, primarily in one region of the country. We attribute this to increased competitive activity, our own promotional timing and higher gasoline prices. Plans have been adjusted to address these issues in order to return USSTC's premium volume to growth as the year progresses." Overall, UST's net sales increased by 3.0 per cent to $506.2 million, operating income increased 4.4 per cent to $237.7 million, net earnings declined 0.2 per cent to $139.7 million and diluted earnings per share increased 8.0 per cent to $0.94. "Despite a challenging US economy, a significant mid-quarter spike in gasoline prices and a meaningful increase in smokeless tobacco competitive activity, UST exceeded its earnings expectations for the quarter," said Murray S. Kessler, chairman and chief executive officer. "We remain on track to deliver a 10 per cent shareholder return for the year, despite the fact that the company is increasing promotional support in the second half to address premium smokeless tobacco volume trends in specific areas of the country most impacted by current economic headwinds and competitive activity." Enditem