Reynolds American Reports $353 Million First-Quarter Profit

Source from:  Journal Now 04/22/2011

Continued market-share gains from its Pall Mall cigarette and Grizzly moist-snuff brands lifted Reynolds American Inc. to another solid performance in the first quarter. The company reported today having $353 million in profit during the quarter compared with $82 million a year ago. Reynolds took health-care charges and settlement charges with three branches of Canadian government during the first-quarter of 2010 Diluted earnings were up 46 cents to 60 cents a share. The average earnings forecast was 59 cents by analysts surveyed by Zacks Investment Research. Its sales were up 0.3 percentage points to $1.99 billion. "Reynolds American has made a solid start to the year, delivering higher first-quarter earnings driven by continued momentum in its operating companies' key brands," said Daniel Delen, who became president and chief effective March 1. "With further improvements in productivity also contributing to the bottom line, I'm pleased to reaffirm today our projections for full-year adjusted earnings growth in the mid- to high-single digits." Pall Mall, as expected, surpassed Camel as Reynolds' cigarette market-share leader, also becoming the No. 3 brand in the country. It also moved past Camel in cigarette shipment volume. The last time Camel didn't hold the top cigarette market share for Reynolds was in 2002, when Doral was its best seller. Pall Mall's rising popularity as a lower-cost cigarette option spurred it to an 8.5 percent market share in the first quarter, up from 8.3 percent in the fourth quarter and 6.5 percent in the first quarter of 2010. Although Camel remains the brand face of Reynolds, its market share was 7.8 percent, down from 8 percent in the fourth quarter, but up from 7.1 percent a year ago. Pall Mall's cigarette shipment volume was at 5.1 billion sticks - up from 4.4 billion a year ago, while Camel's volume was unchanged at 4.7 billion sticks. It is likely that some of Pall Mall's market-share gains also came at the expense of Marlboro, the long-standing top cigarette in the U.S. market. Philip Morris USA reported Wednesday that Marlboro dropped 0.5 percentage points in market share to 42.2 percent and sold 5.7 percent fewer cigarettes in the quarter. Overall, cigarette shipment volume declined 5.2 percent from a year ago. However, accounting for its elimination of de-emphasized private-label brands, the volume was down 3 percent. By comparison, the industry volume was down 3.4 percent. For Grizzly, its No. 1 market share rose to 27.1 percent from 25.6 percent a year ago. Its shipment volume rose 17.1 percent to 85 million cans. Reynolds reaffirmed its estimated earnings for fiscal 2011 would be in the range of $2.60 to $2.70 a share. Enditem