Reynolds’ volumes down but Santa Fe is on the up

R.J Reynolds Tobacco’s US domestic cigarette volume during the year to the end of December, at 61.0 billion, was down by 5.0 percent on that of 2013, 64.2 billion.

Camel volume was unchanged at 20.9 billion but Pall Mall volume fell by 3.2 percent to 20.6 billion; so the company’s total ‘growth brands’ volume was down by 1.6 percent to 41.5 billion.

Volume shipments of RJR’s other brands were down by 11.6 percent to 19.5 billion.

Reynolds American Inc, whose business sectors take in RJR, Santa Fe and American Snuff, announced its full-year and fourth-quarter results yesterday.

RJR’s volume during the fourth quarter to the end of December, at 14.9 billion, was down by 4.9 percent on that of the fourth quarter of 2013, 15.6 billion.

Camel volume fell by 0.7 percent to 5.1 billion and Pall Mall volume fell by 4.9 percent to 5.0 billion; so the company’s total growth brands volume was down by 2.8 percent to 10.1 billion.

The other-brands volume fell by 9.1 percent to 4.8 billion.

RJR’s share of the US cigarette market during the year to the end of December, at 26.5 per cent, was down from 26.6 percent during 2013.

Camel’s share was increased by 0.4 of a percentage point to 10.2 percent while Pall Mall’s share was unchanged at 9.4 percent.

The share held by the company’s other brands fell by 0.5 of a percentage point to 7.0 percent.

Meanwhile, Santa Fe’s cigarette (Natural American Spirit) volume during the year to the end of December, at 3.9 billion, was increased by 10.0 percent on that of 2013, while its volume during the three months to the end of December, at 1.1 billion, was 14.0 percent up on that of the three months to the end of December 2013.

Santa Fe’s share of the retail market during 2014, at 1.6 percent, was up by 0.2 of a percentage point on that of 2013.

American Snuff’s volume during the year to the end of December, at 478.6 million cans, was up by 2.8 percent on that of 2013.

Grizzly volume increased by 3.5 percent to 433.8 million cans, while sales of the company’s other moist snuff products fell by 3.5 percent to 44.9 million cans.

American’s volume during the three months to the end of December, at 120.5 million cans, was down by 1.0 percent from that of the three months to the end of 2013.

Grizzly volume was down by 0.5 percent to 109.2 million cans, while the volume of the company’s other brands fell by 5.3 percent to 11.3 million cans.

American’s share of the moist snuff market during the year to the end of December, at 34.3 percent, was increased by 0.3 of a percentage point on that of 2013.

Grizzly’s share was up by 0.5 of a percentage point to 31.4 percent, while the share of other brands was down by 0.2 of a percentage point to 3.0 percent.

RAI had net sales of $8,471 million during the 12 months to the end of December, 2.9 percent up on those of 2013.

Reported operating income was down by 19.2 percent to $2,531 million, while adjusted operating income was up by 2.8 percent to $3,105 million.

Reported net income was down by 14.4 percent to $1,470 million, while adjusted net income was up by 5.0 percent to $1,831 million.

And reported net income per diluted share was down by 12.4 percent to $2.75, while adjusted net income per diluted share was up by 7.2 per cent to $3.42.

“Reynolds American continued to deliver growth momentum in the fourth quarter, capping a highly successful year for our operating companies’ core operations and key brands,” said president and CEO Susan M. Cameron in announcing the results. “This strong performance contributed to RAI’s excellent total shareholder return of just under 35 percent for 2014.”

In addition, Cameron said, substantial progress was made in RAI’s transforming tobacco strategy. “Our companies’ innovative new products across categories are enhancing prospects for commercial success in an evolving marketplace, while also underscoring our commitment to reducing the harm caused by tobacco,” she said.

Developments were said to have included:

• The national expansion of R.J. Reynolds Vapor Company’s VUSE Digital Vapor

Cigarette and the addition of four more adult-oriented styles;

• The start of the national expansion of Niconovum USA’s ZONNIC nicotine replacement therapy gum; and,
• R.J. Reynolds Tobacco Company’s launch of REVO in Wisconsin, which uses

heat-not-burn technology.

Late last month, RAI and Lorillard shareholders approved RAI’s proposed acquisition of Lorillard and divestiture of select brands and assets to a subsidiary of Imperial Tobacco.

“We have also substantially complied with the Federal Trade Commission’s second request for information, and the process of obtaining the necessary regulatory and other approvals continues to proceed as expected,” Cameron said. “We remain confident that the transaction will close in the first half of this year.”