Moist snuff helps RAI transform its tobacco sales volume

R.J Reynolds Tobacco’s US domestic cigarette volume during the year to the end of December, at 68.9 billion, was down by 5.6 per cent on that of 2011.

Pall Mall volume fell by 0.6 per cent to 21.9 billion and Camel volume fell by 2.3 per cent to 21.2 billion; so the company’s total ‘growth brands’ volume was down by 1.4 per cent to 43.1 billion.

The volume of RJR’s other brands was down by 11.8 per cent to 25.8 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 17.1 billion, was down by 2.7 per cent on that of the fourth quarter of 2011.

Pall Mall volume increased by 5.5 per cent to 5.7 billion while Camel volume fell by 0.2 per cent to 5.3 billion; so the company’s total growth brands volume was increased by 2.7 per cent to 11.0 billion.

The other-brands volume fell by 11.0 per cent to 6.1 billion.

RJR’s share of the domestic cigarette market during the year to the end of December, at 26.5 per cent, was down by 1.1 percentage points from that of its 2011 share.

Pall Mall’s share rose by 0.1 of a percentage point to 8.6 per cent, while Camel’s share was unchanged at 8.5 per cent.

The share held by the company’s other brands fell by 1.2 percentage points to 9.4 per cent.

Meanwhile, Santa Fe’s cigarette (Natural American Spirit) volume during the year to the end of December, at 3.1 billion, was increased by 11.3 per cent on that of 2011, while its volume during the three months to the end of December, at 0.8 billion, was 20.3 per cent up on that of the three months to the end of December 2011.

Santa Fe’s share of the retail market during 2012, at 1.2 per cent, was up by 0.2 of a percentage point on that of 2011.

American Snuff’s volume during the year to the end of December, at 437.1 million cans, was up by 8.0 per cent on that of 2011.

Grizzly volume increased by 9.4 per cent to 389.2 million cans, while sales of the company’s other moist snuff products fell by 1.9 per cent to 48.0 million cans.

American’s volume during the three months to the end of December, at 112.4 million cans, was up by 7.2 per cent on that of the three months to the end of 2011.

Grizzly volume was increased by 8.1 per cent to 100.2 million cans, while the volume of the company’s other brands was up by 0.1 per cent to 12.2 million cans.

American’s share of the moist snuff market during the year to the end of December, at 32.4 per cent, was increased by 1.4 percentage points on that of 2011.

Grizzly’s share was up by 1.6 percentage points to 29.0 per cent, while the share of other brands was down by 0.3 of a percentage point to 3.4 per cent.

RAI had net sales of $8,304 million during the 12 months to the end of December, 2.8 per cent down on those of 2011.

Reported operating income was down by 7.7 per cent to $2,214 million, while adjusted operating income was up by 1.6 per cent to $2,863 million.

Reported net income was down by 9.5 per cent to $1,272 million, while adjusted net income was up by 2.4 per cent to $1,686 million.

And reported net income per diluted share was down by 6.7 per cent to $2.24, while adjusted net income per diluted share was up by 5.7 per cent to $2.97.

“I’m very pleased to report that Reynolds American turned in a strong finish to a challenging year, delivering higher fourth-quarter and full-year adjusted earnings and margin on resilient performance at our operating companies,” said Daniel M. Delen, president and CEO in announcing the results.

“Our reportable business segments – RJR Tobacco, American Snuff and Santa Fe – made steady progress through 2012, building momentum on their powerful key brands.

“Our companies also marked new milestones in innovation, with the further development of exciting products that position RAI’s operating companies for continued growth in a changing marketplace.”

Delen pointed to innovations such as Niconovum USA’s Zonnic nicotine replacement therapy gum and R.J. Reynolds Vapor Company’s Vuse e-cigarette as examples of how RAI and its operating companies are focused on transforming the tobacco industry.

“Our companies continue to focus on strengthening their businesses and finding new opportunities for growth in today’s highly competitive environment, but they’re also driving change in our industry that is critical for commercial success over the long term,” Delen said.