Reynolds American 1Q net income climbs

Reynolds American Inc.'s first-quarter net income surged as the cigarette maker benefited from strength in its Pall Mall and Camel brands and higher prices.
The nation's second-biggest tobacco company said Thursday it earned $353 million, or 60 cents per share, for the period ended March 31, up from $82 million, or 14 cents per share, a year ago.
Last year's quarter also included 37 cents per share in charges related to settlements with the Canadian government.
Adjusted earnings rose to 59 cents per share from 56 cents per share. The results beat the 58 cents per share that analysts polled by FactSet expected.
Reynolds' first-quarter revenue was flat at $1.99 billion. Wall Street forecast revenue of $1.88 billion.
Reynolds American's larger competitor, Altria Group Inc., parent company of Marlboro maker Philip Morris USA, said Wednesday that raising prices and cutting costs helped its first-quarter net income climb 15 percent. The number of cigarettes it shipped fell 6.4 percent and the top-selling Marlboro brand lost market share.
The number of cigarettes the Winston-Salem, N.C., company sold fell 5.2 percent to 17.2 billion cigarettes during the quarter, compared with its estimate of a 3.4 percent decline for the whole industry. First-quarter cigarette market share was stable at 27.9 percent.
Reynolds American sold 16 percent more of its Pall Mall cigarettes during the quarter and its share of the U.S. market grew 2 points to 8.5 percent. The company continues to promote the brand as a longer-lasting and more affordable cigarette as smokers weather the weak economy and high unemployment, and it says half the people who try the brand continue using it. It is the country's third-biggest cigarette brand.
The number of Camel cigarettes it sold remained stable at 4.7 billion cigarettes, while the brand's U.S. market share grew 0.7 points to 7.8 percent for the quarter.
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.
Reynolds American and other tobacco companies are also focusing on cigarette alternatives such as snuff, chewing tobacco and other smokeless products for future sales growth as tax increases, smoking bans, health concerns and social stigma make the cigarette business tougher.
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.
It also said its Camel Snus, small pouches filled with tobacco that users stick between the cheek and gum, showed steady growth.
It also is testing Camel-branded dissolvable, finely milled tobacco shaped into orbs, sticks and strips, in Charlotte, N.C., and Denver.
Reynolds American also reiterated its full-year forecast for earnings between $2.60 and $2.70 per share. The guidance excludes costs related to plant closings and tax items. Analysts expect $2.66.

Analysts eye market share, cigarettes sold as Philip Morris Int'l reports 1Q results Thursday

Cigarette maker Philip Morris International Inc., which sells Marlboro gold and other U.S. brands abroad, reports its first-quarter results before the market opens Thursday.

WHAT TO WATCH FOR: Whether fewer cigarettes sold in the wake of tax hikes and growing tobacco control efforts. Smokers face new tax hikes, bans, health concerns and social stigma worldwide, but the impacts are starker in the U.S. than in many other countries.

With offices in New York and in Lausanne, Switzerland, Philip Morris has compensated for consumers buying cheaper cigarettes — and for the weak economy — by cutting costs and raising prices. Its market share has increased.

Last quarter, Philip Morris International's cigarette shipments increased 3.1 percent to 224.9 billion cigarettes, with gains in Asia, including Indonesia, Korea and Pakistan. The company also benefited from its acquisition of Fortune Tobacco Co. in the Philippines.

Tax increases hurt the number of cigarettes sold in various regions in the fourth quarter. Shipments fell 5.4 percent in the European Union. Volumes fell about 6 percent in Eastern Europe, the Middle East and Africa and grew 2.4 percent in Latin America and Canada.

Weakness in places like Spain, Ukraine, Japan and Mexico could drive volumes down in the first quarter, Goldman Sachs analyst Judy Hong said in a recent research note. Impacts from the recent earthquake and tsunami in Japan won't likely be seen until next quarter.

Analysts also expect the company's earnings to be affected by foreign exchange rates compared with the U.S. dollar. When the dollar is rising, companies that sell goods internationally and must convert revenue from foreign currencies usually take a hit in the dollar value of that revenue, and vice versa. That effect is particularly strong for Philip Morris International, because it does all its business overseas.

WHY IT MATTERS: Philip Morris International is the world's second-biggest cigarette company after the state-controlled China National Tobacco Corp.

Altria Group Inc. in Richmond, Va., owner of Philip Morris USA, spun off Philip Morris International in 2008. Altria is the largest U.S. cigarette seller.

WHAT'S EXPECTED: Analysts on average expect Philip Morris International to report earnings of $1.04 per share on revenue of $6.95 billion, according to FactSet. Analysts typically exclude one-time items.

LAST YEAR'S QUARTER: Philip Morris International reported net income of 90 cents per share on revenue of $6.5 billion.

Earnings Preview: Altria Group Inc.

Altria Group Inc., owner of the biggest U.S. cigarette maker, Philip Morris USA, reports its first-quarter results before the stock market opens Wednesday.

WHAT TO WATCH FOR: Whether the top-selling Marlboro brand continues to gain more of the cigarette market. Marlboro has gained market share as the number of cigarettes sold has declined industrywide in the face of recent tax increases, smoking bans and rising health concerns and social stigma.

Richmond-based Altria has introduced several new products the Marlboro brand -- often with lower promotional pricing -- including special blends of both menthol and nonmenthol cigarettes to help keep the brand growing and attract its competitor's smokers.

The company said Marlboro accounted for 42.3 percent of cigarettes sold in the U.S. in the fourth quarter, although it sold 5.7 percent fewer cigarettes in the period. Its other brands, including Virginia Slims, Parliament and Basic, saw declines in market share and volumes.

Altria faces competition from other companies' less expensive brands -- like Pall Mall from Reynolds American Inc. and Maverick from Lorillard Inc. Even so, Altria has raised prices on some brands and maintained its profit per pack.

Analysts also will look to see how Altria's Black & Mild cigars and Copenhagen and Skoal smokeless tobacco products, as well as Marlboro Snus, perform. Its smokeless products have seen gains in recent quarters. Altria's cigar business saw revenues fall last quarter as it spent more money promoting the brand, but its volumes remained unchanged.

Altria and other tobacco companies are looking to cigarette alternatives -- such as cigars, snuff and chewing tobacco -- for growth.

The company also has planned to conduct a $1 billion share buyback program in 2011 and continues to work on cutting general and manufacturing costs by $1.5 billion compared with 2006.

WHY IT MATTERS: Increased spending on premium brands like Marlboro could signal consumers are adjusting to higher prices on cigarettes following a federal and state tax increases. Consumer spending continues to be critical to a strong rebound from the worst economic downturn since the Great Depression.

WHAT'S EXPECTED: Analysts expect Altria to earn 44 cents per share on sales of $3.9 billion, according to FactSet. Analysts typically exclude one-time items from their earnings estimates.

LAST YEAR'S QUARTER: Altria reported net income of 42 cents per share, excluding one-time items. Its revenue was $3.95 billion, excluding excise taxes.

Smokers Cling to Mistaken Notion of ‘Safer’ Cigarettes, Study Says

Simply banning the use of words such as “light” and “mild” from cigarette packaging may not be enough to wean smokers away from the mistaken belief that some brands are less harmful than others, a study suggests.

To curb misleading marketing practices, the U.S. Food and Drug Administration outlawed the labeling of cigarettes as “light” or “mild” last year. But researchers who surveyed 8,000 smokers from the U.S., the United Kingdom, Canada and Australia concluded that cigarette packaging continues to distort perceptions about smoking even though all conventional brands pose the same level of health risk.

The new study, published in the journal Addiction, found that 20 percent of smokers wrongly believe that some brands of cigarettes are safer than others. Those assumptions were highest among U.S. smokers. And moves by manufacturers that critics and regulators say are intended to perpetuate those notions — by, for example, changing their “light” cigarettes to “silver” and “gold” brands — appear to have paid off.

“Smokers of ‘gold’, ‘silver’, ‘blue’ or ‘purple’ brands were more likely to believe that their own brand might be a little less harmful compared to smokers of ‘red’ or ‘black’ brands,” the researchers say.

The findings could boost efforts to further regulate cigarette packaging. The Australian government is introducing legislation that would limit package design to plain colors and require packages to carry graphic health warnings. In the U.S., likewise, the FDA has proposed bigger and more graphic warnings on cigarette packages.

Study co-author David Hammond attributes the findings in part to a “hangover effect” from decades of sophisticated cigarette marketing. ”It is not terribly surprising when one thinks about the legacy of tobacco industry marketing, as well as the way in which brands continue to be marketed with descriptors such as ‘slims’ and ‘smooth’,” he told the Sydney Morning Herald.

In the U.S., Philip Morris came under scrutiny last year after it attached advertising “onserts” to its Marlboro Lights packs that stated, “Your Marlboro Lights pack is changing. But your cigarette stays the same. In the future, ask for ‘Marlboro in the gold pack.’” The FDA expressed concern that the onserts “may perpetuate the mistaken beliefs associated with your ‘light’ cigarettes when marketed as Marlboro in the gold pack.”

The new study found that smokers also falsely believe that slim cigarettes are less harmful, cigarettes with harsh taste are riskier to smoke than smooth-tasting cigarettes, filters reduce risk, and nicotine is responsible for most of the cancer caused by cigarettes.

Police impound fake 75, 000 Marlboro cigarettes

A JOINT GHANAIAN police and Interpol operation dubbed ‘Operation Atlantic’ has led to the arrest of 16 persons for allegedly engaging in intellectual property offences, running into several thousands of Ghana Cedis, with four suspects currently on the run.

However, all the 16 suspects, according to the Director-General of the Criminal Investigations Department (CID) Deputy Commissioner of Police (DCOP) Prosper Kwame Agblor, have been granted police enquiry bail, explaining that the nature of the purported crime did not warrant their detention for more than the specified 48 hours.

A 40-footer container laden with fake Marlboro cigarettes, he told the media in Accra yesterday, was discovered at the Tema Port during the group’s operation. “If the importers had been successful, they would have made GH¢75,000,” he indicated.

In addition, twenty-eight half pieces, and nine full pieces of replica Ghana Textile Products (GTP) were seized in just three stalls within the 31st December Market in Accra. 1,060 compact discs and digital video discs (DVD) of pirated musical and artistic products were equally confiscated.

DCOP defined Intellectual Property as a number of distinct creations of the mind, where the owners or the originators are granted certain exclusive rights to their assets. These innovations include musical products, literary, artistic works, and discoveries among others.

Reports indicated that some of the seized textile products were made in China, but were marked with the trade name of Ghana Textile Products, and some with designs which GTP did not even produce.

DCOP Agblor cautioned the general public to be wary of innovators, organised groups and criminal gangs, who produce counterfeit products to the detriment of the originators.

He further mentioned that a chunk of Ghanaian songs had been copied illegally on to Chinese phones, popularly known in Ghana as China phones, and sold here in the country.

This piracy phenomenon, he added, had been extended to other technological industries, which manufacture printer cartridges, especially, the Hewlett Packard brand of cartridges, on the Ghanaian market.

“The issue of counterfeiting has become so pronounced that if nothing is done to fight it, the whole nation is going to be inundated by counterfeit and pirated products in the very near future. In other words, counterfeiting or piracy is not limited to only a few selected goods,” he stressed.

Although the Ghana Police Service is bent on flushing out miscreants in society, DCOP Agblor said they could not do it alone, calling on the good citizens of the country to assist them in this exercise.

Cheaper cigarettes Lucky Strike and Pall Mall

British American Tobacco (BAT) announced today decision to lower price of cigarettes Lucky Strike and Pall Mall. New prices will take effect on Wednesday, April 13th 2011.

Lucky Strike entire portfolio will be cheaper 20 dinars, except Lucky Strike 100's which will be cheaper 10 dinars. The new price of Lucky Strike is 130 dinars, except Lucky Strike 100’s which will cost 140 dinars.

At the same time, the entire Pall Mall portfolio will be cheaper for 10 dinars and will be 110 dinars instead so far 120 dinars.

As stated in BAT statement, cheaoer portofolio is result of recent changes in business environment and inadequate excise structure to which the representatives of BAT had warned when it was past at the end of last year.

Students remove more than 5,000 cigarette butts from Jackson Park

About 30 students from three local high schools collected 5,000 to 6,000 cigarette butts on Saturday as they walked through Jackson Park.
“It’s very gross,” said Ciera Griffith, 16, a student at East Henderson High School.

The clean-up was done by members of the Interact Club, SWAT Club and ROTC at East Henderson, Hendersonville and North Henderson high schools. SWAT is an anti-smoking coalition at the schools. The Interact Club focuses on the environment.

“Basically, we want to help make this park a lot cleaner place,” Ciera added.

“I think it’s important to not have cigarette butts around the playground,” said Kimbrella Lee, 16, a student at East.

Students picked up butts around benches, playgrounds, the ball fields and tennis courts in Jackson Park.

This is the second location where students from the schools have picked up cigarette butts around Henderson County. In May of last year, 20 students picked up more than 10,000 cigarette butts along Main Street in Hendersonville. In October, about 50 picked up almost 21,000 cigarette butts on Main Street.

Tracy W. Stevens, Henderson County Public Schools tobacco prevention coordinator, referenced the 2008 annual report, done by the American Association of Poison Control Centers, which cited more than 7,000 reports of young children ingesting tobacco products and needing medical attention. Children who ingest tobacco products may experience vomiting and nausea, according to the Centers for Disease Control and Prevention.