Reynolds American 1Q net income climbs

Reynolds American Inc.'s first-quarter net income surged as the cigarette maker benefited from strength in its Pall Mall and Camel brands and higher prices.
The nation's second-biggest tobacco company said Thursday it earned $353 million, or 60 cents per share, for the period ended March 31, up from $82 million, or 14 cents per share, a year ago.
Last year's quarter also included 37 cents per share in charges related to settlements with the Canadian government.
Adjusted earnings rose to 59 cents per share from 56 cents per share. The results beat the 58 cents per share that analysts polled by FactSet expected.
Reynolds' first-quarter revenue was flat at $1.99 billion. Wall Street forecast revenue of $1.88 billion.
Its shares fell 1 cent to close at $36.28 Thursday.
Reynolds American's larger competitor, Altria Group Inc., parent company of Marlboro maker Philip Morris USA, said Wednesday that raising prices and cutting costs helped its first-quarter net income climb 15 percent. The number of cigarettes it shipped fell 6.4 percent and the top-selling Marlboro brand lost market share.
The number of cigarettes the Winston-Salem, N.C., company sold fell 5.2 percent to 17.2 billion cigarettes during the quarter, compared with its estimate of a 3.4 percent decline for the whole industry. First-quarter cigarette market share was stable at 27.9 percent.
Its other brands include Natural American Spirit, Winston, Kool, Doral and Salem.
Reynolds American sold 16 percent more of its Pall Mall cigarettes during the quarter and its share of the U.S. market grew 2 points to 8.5 percent.
The company promotes the brand as a longer-lasting and more affordable cigarette as smokers weather the weak economy and high unemployment, and it says half the people who try the brand continue using it. It is the country's third-biggest cigarette brand.
The number of Camel cigarettes it sold remained stable at 4.7 billion cigarettes, while the brand's U.S. market share grew 0.7 points to 7.8 percent for the quarter.
Reynolds American also said new contracts with retailers during the quarter will give its brands greater display in stores.
The company's financial performance "reflects R.J. Reynolds' successful focus on its powerful growth brands, Camel and Pall Mall, as part of a defined brand-portfolio strategy," CEO Daniel Delen said in a statement. He also said the company benefited from productivity gains.
Reynolds American and other tobacco companies are also focusing on cigarette alternatives such as snuff, chewing tobacco and other smokeless products for future sales growth as tax increases, smoking bans, health concerns and social stigma make the cigarette business tougher.
The company said it sold 13.2 percent more of its Kodiak and Grizzly smokeless tobacco products in the quarter. Its smokeless market share grew 1.3 points to 31.1 percent of the U.S. market.
It also said its Camel Snus, small pouches filled with tobacco that users stick between the cheek and gum, showed steady growth.
It also is testing Camel-branded dissolvable, finely milled tobacco shaped into orbs, sticks and strips, in Charlotte, N.C., and Denver.
The company also completed the sale of its Lane Ltd. subsidiary for $205 million in cash to Scandinavian Tobacco Group in February. Lane, based in Tucker, Ga., makes Kite and Bugler roll-your-own tobacco and Captain Black pipe tobacco.
Reynolds American also reiterated its full-year forecast for earnings between $2.60 and $2.70 per share. The guidance excludes costs related to plant closings and tax items. Analysts expect $2.66.