WINSTON-SALEM, N.C. — Integration of the Newport tobacco brand, acquired by Reynolds American Inc. (RAI) as part of its purchase of Lorillard Inc., has been “going very well” and will make the company a “significantly more profitable business,” RAI President and CEO Susan M. Cameron said Tuesday during the company's 2015 fiscal second-quarter earnings call.
Since the acquisition was just recently completed on June 12, Newport “hasn’t been in the house that long,” but she did note Newport’s greatest strength is its menthol products.
“We are very excited about having Newport in the house. We are very excited about the future of Newport,” Cameron stated.
RAI is getting to know the Newport consumer, has already picked up 50,000 new retail contracts since the acquisition closed, and the company “will look to energize and reinforce the Newport portfolio,” she added.
Overall, the integration of Lorillard has gone well thus far, the chief executive also reported, but it’s still early in the transformation process. “The transformation is still far from complete, and there is a good amount of work to be done,” Cameron said.
Still, she is extremely confident about the future of the company. In fact, RAI announced it will split its stock two-for-one on Aug. 31 and increase its dividend by 7.5 percent.
“We continue to have a high level of commitment to our shareholders,” said Cameron.
Other than Newport, the CEO pointed to R.J. Reynolds Vapor Co.’s Vuse electronic cigarette as one product performing extremely well during RAI’s most recent quarter.
“Vuse has been excellent for us,” noted Cameron. “It is now sold nationally in 100,000 retailers and is the top-selling e-cigarette in the c-store channel. We continue to see great promise in the vapor category.”
Q2 EARNINGS RISE
Companywide, RAI reported adjusted net earnings of $579 million for the 2015 second quarter ended June 30, compared to $474 million for 2014’s second quarter. These earnings reflect earnings from brands acquired from Lorillard for the period of June 12-30.
Adjusted operating income rose to $1.011 billion vs. $808 million during the same timeframe in 2014.
During Tuesday's earnings call, RAI’s top exec also briefly discussed her expectation that the Food and Drug Administration will unveil its final deeming regulation during this summer. “We are confident we can respond to these regulations,” Cameron concluded.
Winston-Salem-based Reynolds American Inc. is the parent company of R.J. Reynolds Tobacco Co., Sante Fe Natural Tobacco Co., American Snuff Co. LLC, Niconovum USA Inc., Niconovum AB and R.J. Reynolds Vapor Co.