UST Profits Rise

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UST Profits Rise

07/23/2001
UST Inc., the top U.S. maker of chewing tobacco, said second-quarter profits climbed 8 percent, boosted by better-than-expected growth at its smokeless tobacco and wine divisions.

The company, whose U.S. Smokeless Tobacco Co. unit makes Skoal and Copenhagen chewing tobaccos, said net income rose to $121.7 million from $112.2 million a year earlier, according to Reuters. Net sales climbed 7.7 percent to $422.2 million.

UST said its third-quarter earnings per share should rise about 7 percent and that it remains on track to achieve its previous guidance for full-year earnings growth of 10 percent.

"I am confident that we will achieve our 10-percent (earnings per share) growth forecast despite lower projected interest income, higher shares outstanding and the potential impact of the large excise tax increase on smokeless tobacco in California," Chairman and CEO Vincent Gierer Jr. said in a statement.

Gierer said that while California accounts for less than 5 percent of the company's total smokeless sales, he sees a net loss of 3 million to 5 million cans in the second half in the state. He also said the company will be looking at judicial redress for the increased California excise tax.

Analysts expect the company to earn $2.90 to $3.00 a share for the full year, with a consensus estimate of $2.95, the report said. The consensus estimate calls for 10.8 percent growth from last year's earnings of $2.70 a share.