Reynolds American Sales Surge on Lorillard Acquisition--Update
April 26 2016 - 11:22AM
Dow Jones News
By Tripp Mickle and Anne Steele
Reynolds American Inc. on Tuesday reported a 42% increase in
first-quarter sales, driven by last year's $25 billion acquisition
of Lorillard Inc. and its Newport cigarette brand.
The tobacco company increased cigarette volume 34% during the
quarter as Newport, the U.S.'s leading menthol brand, benefited
from better placement in gas stations and tobacco stores. Newport's
market share increased to 14% during the quarter from 13.4% a year
ago.
Chief Executive Susan Cameron said Newport's manufacturing
integration is progressing smoothly and is now expected to be
completed by the middle of this year, well ahead of the initial
projection for the end of 2016. The company also said it remains on
track to achieve $800 million in cost savings from last year's
Lorillard acquisition.
"Newport has delivered impressive market-share gains during this
successful transition, and the brand has been a driving force
behind our accelerated business performance over the past three
quarters," she said.
Ms. Cameron also said she has agreed to remain with Reynolds to
see through the full integration of the companies later this year.
Her original agreement to return as chief executive in 2014 was
scheduled to end April 30, but included the ability to be
extended
Reynolds, the nation's No. 2 tobacco company behind Altria Inc.
by sales, reported a first-quarter profit of $3.57 billion, or
$2.49 a share, up from $389 million, or 36 cents a share, a year
earlier. The increase reflected the company's $5 billion sale to
Japan Tobacco Inc. of non-U. S. rights to the Natural American
Spirit cigarette brand.
Excluding a gain tied to that sale, and charges for debt and
financing costs, among other things, per-share earnings rose to 50
cents a share, matching Wall Street's estimate, from 43 cents.
Overall sales climbed 42% to $2.92 billion. In addition to
strong sales of Newport, the company said its Natural American
Spirit brand increased volume 22% to 1.2 billion cigarettes from 1
billion cigarettes. The higher-priced cigarette brand, which
doesn't use additives such as glycerol, increased its market share
to 2% during the period from 1.7% a year earlier.
Reynolds's total market share increased to 34.6% in the quarter
from 34.3% a year earlier on a pro forma basis.
Write to Tripp Mickle at Tripp.Mickle@wsj.com and Anne Steele at
Anne.Steele@wsj.com
(END) Dow Jones Newswires
April 26, 2016 12:07 ET (16:07 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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