RICHMOND, Va. - Reynolds American Inc. (RAI) said Tuesday that its fourth-quarter profit more than doubled as higher prices and lower legal expenses offset a decline in cigarette sales.
The results from the second-biggest
U.S. tobacco company missed Wall Street expectations, however, and its shares
dipped in premarket trading.
The maker of Camel, Pall Mall
cigarettes and Natural American Spirit cigarettes earned $292 million, or 54
cents per share, for the quarter ended Dec. 31. That's up from $139 million, or
25 cents per share, in the year-ago period that included pension and trademark-related
The Winston-Salem, North
Carolina,-based company said adjusted earnings were 77 cents per share, missing
Wall Street expectations by 4 cents.
Revenue excluding excise taxes fell
about 2 percent to $2.04 billion. Analysts polled by FactSet expected revenue
of $2.07 billion.
The number of cigarettes sold by its
R.J. Reynolds Tobacco subsidiary fell about 9 percent during the quarter to
15.6 billion. When adjusting for trade inventory changes, the company said its
cigarette volumes fell 7 percent, compared with its estimated industry decline
of 4 percent.
Volumes for Pall Mall fell more than 6
percent and volumes for Camel fell 3.5 percent. The brands account for more
than 60 percent of the company's total cigarette volume. Shipments of its other
brands, which include Winston, Kool, Doral and Salem, fell about 15 percent.
Camel's market share increased 0.4
percentage points to 9 percent of the U.S. market, while Pall Mall's market
share grew 0.2 percentage points to 9.1 percent.
The company has promoted Pall Mall as
a longer-lasting and more affordable cigarette as smokers weather the weak
economy and high unemployment.
The number of Natural American Spirit
cigarettes it sold grew nearly 10 percent to about 1 billion cigarettes.
Reynolds American and other tobacco
companies are also focusing on cigarette alternatives such as snuff, chewing
tobacco and electronic cigarettes as tax hikes, smoking bans, health concerns
and social stigma make the cigarette business tougher.
Volume for its smokeless tobacco
brands including Grizzly and Kodiak rose about 8 percent compared with a year
ago. The brands had a 33.3 percent share of the U.S. retail market, which is
tiny compared with cigarettes.
For the full year, the company said
its profit rose 35 percent to $1.72 billion on revenue of $8.24 billion,
excluding excise taxes.
Reynolds American said Tuesday it
expects full-year 2014 earnings in the range of $3.30 and $3.45 per share.
Analysts expect $3.44 per share.
Its shares slipped 31 cents to $48.50.0 in premarket trading about an hour ahead of the market opening.