RAI's Volume Cigarette Sales Down But Snuff Sales Up

Source from:  Tobacco Reporter 02/09/2011

R.J. Reynolds' volume cigarette sales during the 12 months to the end of December, at 77.5 billion, were down by 5.1 per cent on those of the 12 months to the end of December 2009, 81.7 billion. Sales were down by 2.1 per cent (from 78.1 billion to 76.4 billion) if private labels, which the company has started to "de-emphasise", are excluded from the figures. Sales of the growth brands, Camel filters and Pall Mall, were increased by 16.5 per cent from 35.8 billion to 41.7 billion, with Camel's sales up by 1.9 per cent from 21.2 to 21.6 billion and Pall Mall's sales up by 37.7 per cent from 14.6 billion to 20.1 billion. Sales of support brands were down by 17.5 per cent from 37.9 billion to 31.3 billion, while sales of non-support brands were down by 42.9 per cent from 8.0 billion to 4.6 billion. Reynolds' retail market share during the 12 months to the end of December, at 28.1 per cent, was down by 0.2 of a percentage point on that of the 12 months to the end of December 2009. Excluding private label brands its market share was increased by 0.7 of a percentage point to 27.5 per cent. The market share of the company's growth brands was up by 2.8 percentage points from 12.3 per cent to 15.1 per cent, with Camel up 0.2 of a percentage point from 7.5 per cent to 7.7 per cent, and Pall Mall up 2.7 percentage points from 4.8 per cent to 7.4 per cent. The market share of Reynolds' support brands fell by 1.9 percentage points from 13.1 per cent to 11.2 per cent, and the share of its non-support brands fell by 1.2 percentage points from 2.9 per cent to 1.7 per cent. These figures were announced yesterday as part of Reynolds American Inc's (RAI) fourth quarter and full year 2010 results. During the three months to the end of December, Reynolds' domestic cigarette volume sales, at 19.0 billion, were down by 5.1 per cent on those of the three months to the end of December 2009, 20.0 billion. Excluding private label brands, sales were down by 1.9 per cent, from 19.2 billion to 18.8 billion. Sales of growth brands were increased by 13.5 per cent from 9.4 billion to 10.7 billion, with sales of Camel filter cigarettes up by 8.5 per cent from 5.0 billion to 5.4 billion, and sales of Pall Mall up 19.1 per cent from 4.4 billion to 5.3 billion. Sales of support brands fell by 16.4 per cent from 8.8 billion to 7.3 billion, and sales of non-support brands fell by 47.8 per cent from 1.8 billion to 0.9 billion. Meanwhile, American Snuff's volume sales of moist snuff during the 12 months to the end of December increased by 5.8 per cent over those of the 12 months to the end of December 2009, from 356.5 million cans to 377.3 million cans. Sales of Grizzly were up by 6.8 per cent from 304.6 million to 325.3 million, sales of Kodiak were down by 0.6 per cent from 47.8 million to 47.5 million, and sales of other brands were up by 11.2 per cent from 4.1 million to 4.5 million. American's share of the retail market for moist snuff was down by 0.2 of a percentage point from 29.4 per cent to 29.2 per cent. The share of Kodiak dropped by 0.2 of a percentage point from 3.8 per cent to 3.6 per cent, while the share of Grizzly and American's other brands were unchanged at 25.3 per cent and 0.3 per cent respectively. For the full year to the end of December, RAI's net sales were increased by 1.6 per cent from $8,419 million to $8,551 million, reported operating income was up by 36.3 per cent from $1,775 million to $2,149 million, and adjusted operating income was up by 6.3 per cent from $2,398 million to $2,549 million. Reported net income was increased by 15.7 per cent from $962 million to $1,113 million and adjusted income was up by 7.6 per cent from $1,353 million to $1,456 million. Reported net income per diluted share was up b 15.2 per cent from $1.65 to $1.90 and adjusted net income per diluted share was up by 7.3 per cent from $2.32 to $2.49. For the three months to the end of December, RAI's net sales were down by 0.7 per cent from $2,096 million to $2,081 million, reported operating income was up by 44.3 per cent from $393 million to $567 million, and adjusted operating income was up by 9.8 per cent from $563 million to $618 million. Reported net income was increased by 43.7 per cent from $215 million to $309 million and adjusted income was up by 9.0 per cent from $321 million to $350 million. Reported net income per diluted share was up by 43.2 per cent from $0.37 to $0.53 and adjusted net income per diluted share was up by 9.1 per cent from $0.55 to $0.60. "I'm very pleased to report that Reynolds American finished the year on a strong note, with additional fourth-quarter gains in our operating companies' key brands and higher adjusted earnings and margins," said Susan M. Ivey, RAI's president and CEO. "Both of our reportable business segments continued to deliver profitable growth despite a challenging economic environment in 2010 - an excellent performance that demonstrates the strength of their key brands and execution of their business strategies. "This momentum positions RAI well for the year ahead." Ivey said that R.J. Reynolds had increased its adjusted operating income and margin during the year; that American Snuff had posted higher adjusted operating income and market share; that key brands had delivered volume and share growth; and that RAI had demonstrated its commitment to providing outstanding shareholder value, with a dividend increase, a two-for-one stock split and an increase in its dividend payout target. And RAI's Santa Fe Natural Tobacco Co subsidiary had continued to deliver robust growth in 2010, with double-digit volume and earnings gains. And Ivey said that RAI's announcement on January 14 that it planned to sell its Lane subsidiary, which manufactures a variety of tobacco products, to the Scandinavian Tobacco Group, meant that RAI's operating companies could devote their energy and resources to the primary growth categories within their businesses. "Given the company's 2010 achievements and positive momentum, this is an appropriate time for me to hand over the reins," said Ivey, who retires on February 28. "RAI's operating companies remain sharply focused on enhancing their key brands and improving efficiencies to produce results for today, while also investing in innovative tobacco products for growth over the long term." Enditem