Smokeless Tobacco Pushes Reynolds Earnings Up

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Smokeless Tobacco Pushes Reynolds Earnings Up


WINSTON-SALEM, N.C. -- Pall Mall and Camel brands have helped boost profits at Reynolds American Inc., according to an Associated Press report on the company's 2011 first quarter earnings.

Overall, the tobacco company earned $353 million, or 60 cents per share, for the period ending March 31. This was up from $82 million, or 14 cents a share, from a year ago. Adjusted earnings rose to 59 cents per share, up three cents. The results beat the 58 cents per share analysts who were polled by FactSet had predicted. Reynolds' first-quarter revenue remained flat at $1.99 billion.

And while the number of cigarettes the company sold dropped 5.2 percent to 17.2 billion during the quarter, Reynolds American did sell 16 percent more of its Pall Mall cigarettes during that time period. Another popular brand, Camel, saw cigarette sales stay even at 4.7 billion cigarettes, but the brand's Camel Snus showed steady growth.

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.

Like other tobacco companies, Reynolds American is turning its focus to other tobacco products, such as snuff and chewing tobacco. Smokeless tobacco products have increasingly garnered attention as states continue to raise taxes and implement smoking bans, and as smokers face health concerns and the social stigma of smoking. To that end, 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.