Cigarette Sales Down But Snuff Sales Up

Source from:  Tobacco Reporter 02/09/2010

R.J. Reynolds Tobacco's volume cigarette sales during the 12 months to the end of December, at 81.7 billion, were down by 7.8 billion or 8.7 per cent on those of the previous 12 months. Sales of growth brands, Camel filters and Pall Mall, were up by 3.9 billion or 12.3 per cent to 35.8 billion, with Camel sales down by 2.1 billion or 9.2 per cent to 21.2 billion but sales of Pall Mall up by 6.1 billion or 70.9 per cent to 14.6 billion. Sales of support brands were down by 8.7 billion or 18.7 per cent to 37.9 billion and sales of non-support brands were down by 3.0 billion or 27.2 per cent to 8.0 billion. All of the losses were in the premium categories where sales were down by 7.8 billion or 13.9 per cent. Value sales remained largely unchanged at 33.5 billion. Over the 12 months, premium cigarette sales represented 59.0 per cent of total sales, down from 62.5 per cent during the previous 12-month period. Total US industry sales during the 12 months, at 315.7 billion, were reported by Reynolds to have been down by 29.6 billion or 8.6 per cent, with premium products making up 70.5 per cent of total sales, down from 72.7 per cent a year ago. Reynolds' share of the US market, at 28.3 per cent, was down by 0.1 of a percentage point. Pall Mall's share increased by 2.1 percentage points to 4.8 per cent. For the fourth quarter, Reynolds' sales were down by 1.7 billion or 7.6 per cent to 20.0 billion and its premium product share of those sales was down to 56.7 per cent. The company's share of the market rose by 0.2 of a percentage point to 28.5 per cent. Meanwhile, Conwood's sales of moist snuff cans during the 12 months to the end of December, at 356.5 million, were up by 21.3 million or 6.4 per cent. And its share of shipments rose by 1.8 percentage points to 29.4 per cent. During the fourth quarter, sales were up by 5.0 million cans or 5.7 per cent to 91.4 million cans, and the company's share of shipments rose by 1.2 percentage points to 29.4 per cent. Reynolds American yesterday announced fourth-quarter adjusted EPS (earnings per share) of $1.10, excluding restructuring and trademark impairment charges, down 13.4 per cent from that of the previous year. Reported EPS of $0.74 was down by 15.9 per cent. Both declines were primarily driven by higher pension expenses. For the full year, adjusted EPS, excluding restructuring and trademark impairment charges, was $4.64, down by 3.1 per cent as cigarette volume declines, higher pension and legal expenses, and lower premium moist-snuff margins more than offset higher pricing and gains in productivity and moist-snuff volume. On a reported basis, full-year EPS was $3.30, down by 27.6 per cent because of higher year-over-year trademark impairment charges and a prior-year gain on the Gallaher joint-venture termination. "I'm very pleased with the solid underlying performance of Reynolds American in 2009, given the especially challenging economic and industry environment," said Susan M. Ivey, chairman, president and CEO. "Our operating companies continued to enhance their fundamental strength with key-brand volume and share gains, and productivity improvements. "However, our companies' strong underlying performance was overshadowed by the negative impact of 40 cents per share in increased pension expense, which drove a year-over-year EPS decline," she said. "RAI and its operating companies faced an extraordinary set of challenges in 2009, including unprecedented increases in tobacco excise taxes, heightened competitive activity and the effects of a deep recession. "Even so, our operating companies displayed great resilience, based on the strength and momentum of their business strategies and core brands." Enditem