Reynolds' Cigarette Shipments Down in 2Q

Source from:  Tobacco Reporter 07/26/2010

R.J. Reynolds has reported domestic cigarette volumes during the three months to the end of June, at 20.3 billion, down by 9.5 per cent on those of the three months to the end of June 2009. The company said that total industry sales had fallen by 7.1 per cent to 78.4 billion during the quarter. Reynolds and American Snuff's performances were reported as part of Reynolds American's financial results. Sales of Camel filters increased by 2.7 per cent to 5.8 billion and sales of Pall Mall grew by 9.7 per cent to 5.0 billion. But sales of support brands fell by 18.1 per cent to 8.3 billion and those of non-support brands dropped by 42.8 per cent to 1.2 billion. Overall, sales of Reynolds' premium brand products were down by 7.9 per cent to 11.9 billion, while sales of "value" brands were down by 11.7 per cent to 8.4 billion, putting the premium-to-total mix at 58.6 per cent, up from 57.6 per cent a year earlier. Reynolds' share of the US domestic cigarette market during the three months to the end of June, at 27.9 per cent, was down by 0.8 of a percentage point on that of the three months to the end of June 2009. Camel's share rose by 0.3 of a percentage point to 7.8 per cent while Pall Mall's share rose by 1.8 percentage points to 7.0 per cent. Meanwhile, R.J. Reynolds' domestic cigarette volumes during the six months to the end of June, at 38.5 billion, were down by 6.3 per cent on those of the six months to the end of June 2009. The company said that total industry sales had fallen by 4.9 per cent to 150.5 billion during the half year. Sales of Camel filters fell by 1.0 per cent to 10.6 billion while sales of Pall Mall grew by 46.1 per cent to 9.4 billion. Sales of support brands fell by 19.5 per cent to 16.0 billion and those of non-support brands dropped by 38.0 per cent to 2.6 billion. Overall, sales of Reynolds' premium brand products were down by 9.8 per cent to 22.2 billion, while sales of "value" brands were down by 1.2 per cent to 16.3 billion, putting the premium-to-total mix at 57.7 per cent, down from 59.9 per cent a year earlier. Reynolds' share of the US domestic cigarette market during the six months to the end of June, at 27.9 per cent, was down by 0.3 of a percentage point on that of the six months to the end of June 2009. Camel's share fell by 0.1 of a percentage point to 7.5 per cent while Pall Mall's share rose by 2.7 percentage points to 6.8 per cent. American Snuff's moist snuff volumes during the three months to the end of June, at 97.1 million cans, were up by 3.0 per cent on those during the three months to the end of June 2009. Sales of Grizzly were increased by 4.2 per cent to 84.2 million cans, sales of Kodiak were down by 5.5 per cent to 11.6 million cans and sales of other brands were increased by 6.6 per cent to 1.3 million cans. American Snuff's retail market share was unchanged at 29.4 per cent, with Grizzly's share up by 0.1 of a percentage point to 25.5 per cent, Kodiak's share down by 0.2 of a percentage point to 3.5 per cent, and other brands' share up by 0.1 of a percentage point to 0.4 per cent. Meanwhile, American Snuff's moist snuff volumes during the six months to the end of June, at 182.8 million cans, were up by 7.1 per cent on those during the six months to the end of June 2009. Sales of Grizzly were increased by 7.6 per cent to 156.8 million cans, sales of Kodiak were up by 2.6 per cent to 23.5 million cans and sales of other brands were increased by 22.4 per cent to 2.5 million cans. American Snuff's retail market share was down by 0.3 of a percentage point to 28.8 per cent, with Grizzly's share down by 0.3 of a percentage point to 24.8 per cent, Kodiak's share down by 0.1 of a percentage point to 3.6 per cent, and other brands' share up by 0.1 of a percentage point to 0.4 per cent. Reynolds American's net sales during the three months to the end of June, at $2,245 million were down by 0.2 per cent on those of the three months to the end of June 2009. But net sales during the six months to the end of June, at $4,231 million, were up by 1.4 per cent on those of the six months to the end of June 2009. Reported operating income during the second quarter was down by 4.5 per cent to $620 million, but during the first half was up by 59.5 per cent to $1,190 million. Adjusted operating income during the second quarter was up 4.0 per cent to $675 million while during the first half it was up by 3.8 per cent to $1,245 million. Reported net income during the second quarter was down by 9.5 per cent to $341 million, but during the first half was up by 9.9 per cent to $423 million. Adjusted net income during the second quarter was up 2.1 per cent to $385 million while during the first half it was up by 6.0 per cent to $710 million. "I'm very pleased with Reynolds American's performance in the second quarter," said Susan M. Ivey, RAI's chairman, president and CEO. "We delivered higher adjusted earnings and margin, driven by our operating companies' key-brand performance and continued productivity gains. These year-over-year gains are particularly outstanding given last year's unusually strong second quarter." Enditem