Reynolds American 3Q Profit Jumps 72 Percent

Source from:  The Associated Press 10/23/2009

Cigarette maker Reynolds American Inc. said Thursday despite selling fewer cigarettes, its profit surged 72 percent from last year's third-quarter, when charges from trademark impairment and restructuring dampened its earnings. Tax increases and the tough economy took 11 percent out of the volume of cigarettes shipped by the maker of Camel, Pall Mall and Natural American Spirit. But the nation's second-biggest cigarette company raised its full-year profit outlook based in part on its quarterly performance. Reynolds American earned $362 million, or $1.24 per share, for the period that ended Sept. 30. That's up from $211 million, or 72 cents per share, a year earlier. Analysts, who typically exclude one-time items, forecast profit of $1.17 per share, according to a Thomson Reuters poll. On that basis, Reynolds American earned $1.24 per share as well, which was 3.9 percent less than the $1.29 per share profit it reported a year earlier. Reynolds American's results come on the heels of those for Altria Group Inc., parent company of the nation's No. 1 tobacco company, Philip Morris USA. Altria reported Wednesday that its third-quarter profit to rose 1.7 percent on cost-cutting and improved results from its cigar unit, even though it sold fewer cigarettes. Analysts are closely watching the industry's third-quarter reports for the first real cigarette volume figures for the period, when a 62-cent federal tax increase took effect. Winston-Salem, N.C.-based Reynolds American said the quarter's revenue dipped 5 percent to $2.15 billion from $2.27 billion, missing Wall Street's $2.19 billion estimate. The company estimated that its 11 percent drop in volume was better than the industry's overall decline, which it pegged at 12.6 percent. Camel lost 0.1 percentage point of market share in the U.S. and ended the quarter with 7.7 percent, according to data from Information Resources Inc. Pall Mall, which the company has been aggressively promoting, gained 2.3 points to end up with 5.0 percent of the U.S. market. Like other tobacco companies, Reynolds is focusing on cigarette alternatives - such as snuff and chewing tobacco - for sales growth. Volumes increased in Reynolds' smokeless tobacco division, which makes Kodiak and Grizzly brand products, by 11.7 percent during the quarter. The cigarette maker lifted its full-year profit outlook to a range of $4.60 to $4.70 per share from $4.40 to $4.60 per share. Analysts predict profit of $4.59 per share for the year. Enditem