DOW JONES NEWSWIRES
Reynolds American Inc.'s (RAI) third-quarter earnings rose 5.2%
as revenue improved despite falling cigarette volume.
The results beat analysts' expectations and the company raised
the low end of its 2010 earnings view.
Reynolds and larger rival Altria Group Inc. (MO) have
diversified into smokeless tobacco for growth as cigarette sales
continue to decline. Reynolds has shifted its focus to a few key
brands and closed cigarette plants to consolidate production.
The second-largest U.S. tobacco company reported a profit of
$381 million, or $1.30 a share, up from $362 million, or $1.24 a
share, a year earlier. The latest quarter included 5 cents of
charges. Revenue increased 4% to $2.24 billion.
Analysts polled by Thomson Reuters most recently forecast
earnings of $1.34 on revenue of $2.2 billion.
Gross margin was flat at 47.1%.
Cigarette earnings increased 7.5% amid higher prices, though
domestic volume dropped 2.6%. Total domestic market share was flat
at 28.2%. However, combined share for its Camel and Pall Mall
brands rose 3.2 percentage points to 15.8%.
At the American Snuff unit, which makes Grizzly- and
Kodiak-brand moist snuff, earnings rose 9%. Total moist snuff
volume was up 1.2%, while total shipments edged down 0.7%.
Shares of Reynolds closed Wednesday at $63 and were inactive
premarket. The stock is up 19% this year.
-By Tess Stynes, Dow Jones Newswires; 212-416-2481;
Tess.Stynes@dowjones.com