The maker of Camel Cigarettes, on Thursday posted a rise in fourth-quarter profit, helped by increased sales of smokeless ...
Reynolds American Inc, the maker of Camel Cigarettes, on Thursday posted a rise in fourth-quarter profit, helped by increased sales of smokeless tobacco, but sold fewer Cigarettes than some analysts expected.
Earnings also were lower than some analysts' estimates and Reynolds shares fell More than 3 percent.
Reynolds has benefited from higher cigarette prices, a focus on promoting a sMall number of brands, a shift in its sales to More expensive products and cost cuts.
The company, whose other brands include Grizzly smokeless tobacco, said profit rose to $297 million, or $1.01 a share, from $180 million, or 61 cents a share, a year earlier.
Excluding one-time items, earnings were $1.15 a share, matching the analysts' average forecast, according to Reuters Estimates.
Net sales rose 7.8 percent to $2.23 billion.
The R.J. Reynolds Tobacco unit sold 23.1 billion Cigarettes, down 8.6 percent from a year earlier. But its Kool, Camel and Pall Mall "growth brands," where Reynolds focuses the bulk of its marketing, saw market share grow to 13.2 percent from 12.6 percent a year earlier.
The U.S. cigarette market has fallen steadily since 1981 as More bans on smoking in public places have been enacted and health messages against the dangers of smoking became More prevalent.
The company's Conwood smokeless tobacco division sold 76.7 million cans, up 8.8 percent from a year earlier. Profit in the unit rose 5 percent.
"Fourth-quarter results were somewhat weaker than expected," Judy Hong, an analyst at Goldman Sachs, said in a research note. "The volume decline of 8.6 percent at R.J. Reynolds Tobacco was much steeper than we anticipated, partly due to inventory destocking."
She also said the profit growth at Conwood was below her expectation and a slowdown from the rate seen in past quarters.
For 2008, Reynolds forecast a mid-single-digit percentage increase in earnings per share from $4.57, excluding items, in 2007. Analysts on average had forecast a rise of nearly 7 percent to $4.88 a share, according to Reuters Estimates.
Reynolds shares were down $2.35 at $62.21 on the New York Stock Exchange. The stock trades at about 14 times estimated 2008 earnings, compaRed with a multiple of 15.3 for industry leader Altria Group Inc.