Reynolds American''s 3Q15 American Snuff Company Results

Source from:  Market Realist 11/10/2015

Reynolds American's 3Q15 Results Are In-Line with Analysts' Estimates

American Snuff's 3Q15 results

Reynolds American's (RAI) 3Q15 revenue for the American Snuff Company rose ~4% to $0.22 billion in 3Q15 compared to $0.20 billion in 3Q14. The rise was primarily due to higher pricing. Operating income rose 3.4% to $0.12 billion in 3Q15.

Reasons for the rise

The rise in operating income came about due to higher pricing and volume, which was partially offset by the timing of marketing support activity. American Snuff's 3Q15 moist-snuff retail market share rose 1.3 percentage points to 33.7% on volume growth of 4.4%. This outpaced industry growth of about 2.5%.

The rise in retail market share was driven by American Snuff's flagship brand Grizzly. Grizzly's market share rose to 30.9% on volume growth of 4.6% in 3Q15.

Grizzly versus peers

Other companies such as Altria Group (MO), Japan Tobacco (JAPAF), and Imperial Tobacco Group (ITYBY) have a presence in the smokeless tobacco product market. Marlboro Snus, Skruf Snus, and Zerostyle Mint are some of their smokeless tobacco product brands.

To learn more about Altria Group's smokeless product segment, please read A Glimpse at Altria's Smokeless Tobacco Products Segment.

British American Tobacco (BTI) and Philip Morris International (PM) do not have a presence in the smokeless tobacco product market.

Focus on innovation

American Snuff Company is planning to focus on market share and profits from its Grizzly branded products through innovation, branding, and promotions. For example, Grizzly's continued strong leadership position in the popular wintergreen style was supported by its recently expanded Dark Wintergreen. The brand's Dark Wintergreen style was expanded nationally in March 2015 and continues to perform well as per CEO (chief executive officer) Susan M. Cameron's comments.

American Snuff also offered Grizzly pouches, which provide pre-measured portions and are more convenient than traditional moist snuff.

Reynolds American has exposure in the First Trust Large Cap Growth AlphaDEX ETF (FTC), with ~1% of the total weight in its portfolio. Enditem