Reynolds Continues to Draw on Newport -- Earnings Preview
February 10 2016 - 4:57PM
Dow Jones News
By Tripp Mickle
Reynolds American Inc. is scheduled to announce fourth quarter
earnings before the market opens Thursday. Here's what you need to
know:
EARNINGS FORECAST: Net income of 50 cents a share is the
consensus of analysts surveyed by Thomson Reuters, compared with 28
cents reported a year earlier.
REVENUE FORECAST: Revenue of $3.0 billion is forecast, compared
with $2.13 billion reported for the period a year earlier.
WHAT TO WATCH:
MAKE IT MENTHOL: The addition of Newport, which entered
Reynolds's portfolio as part of the acquisition of Lorillard Inc.
that closed in June, is expected to boost the company's sales and
market-share gains for the quarter. The biggest potential gains
from the brand are expected in the months ahead as a standstill
agreement comes to an end and the company can begin to cut new
contracts with retailers for Newport and other brands.
NATURAL AMERICAN: The company last month closed its $5 billion
sale of global rights to Natural American Spirit to Japan Tobacco
in a deal that was expected to deliver $3.2 billion after taxes.
The company this month said it would pay down up to $2.8 billion of
debt, which analysts believe came from proceeds to Japan Tobacco.
What does it plan to do with any remaining proceeds from the
sale?
VAPED OUT: Sales of the company's e-cigarette brand Vuse slowed
late last year. The company announced late last year that it is
adding Bluetooth connectivity to the devices to help consumers
track battery life on their smartphone. It also plans to release a
liquid-based tank system that will compete with the vaporizers that
claim about half of the e-cigarette industry's estimated $3.5
billion in sales. But will those innovations help reverse recent
sales trends?
Write to Tripp Mickle at Tripp.Mickle@wsj.com
(END) Dow Jones Newswires
February 10, 2016 16:42 ET (21:42 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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