WASHINGTON (dpa-AFX) - Reynolds American Inc (RAI) Wednesday reported a 16 percent rise in fourth-quarter net income, as improved margins at R.J. Reynolds Tobacco Company offset drop in cigarette volume. American Snuff results were weak, while Sante Fe reported improved results. Adjusted earnings came in ahead of Street estimates while revenues missed expectations.
Reynolds American's net income for the fourth quarter rose to $304 million or $0.52 per share from $262 million or $0.45 per share in the year-ago quarter.
Adjusted net income for the quarter rose 12.9 percent to $420 million from $372 million last year. Adjusted earnings per share rose to $0.72 from $0.64 last year.
On average, 11 analysts polled by Thomson Reuters expected earnings of $0.69 per share for the quarter. Analysts' estimates typically exclude special items.
Net sales for the fourth quarter grew 0.1 percent to $2.083 billion from $2.081 billion in the prior-year quarter. Seven Street analysts had a consensus revenue estimate of $2.120 billion for the quarter.
Operating income for the quarter rose 5.7 percent to $516 million from $488 million in the year-ago quarter. Adjusted operating income rose 9.4 percent from last year.
At R.J. Reynolds, adjusted operating income rose 9.2 percent, as higher pricing and productivity improvements continued to offset lower cigarette volumes. The margin was 33.6 percent versus 30.7 percent last year.
Cigarette volume dropped 7.4 percent, due to heavily promoted competitive line extensions, the timing of the company's promotional activity, and the decision to move away from the company's private label brands. Total cigarette market share, excluding private label brands, fell to 27.0 percent from 28.1 percent. Declines on the company's support and non-support brands more than offset growth-brand gains.
The growth brands, Camel and Pall Mall, increased their combined fourth-quarter market share by 0.3 percentage points from the prior-year quarter, to 16.5 percent.
Full-year earnings per share rose 25 percent to $2.40, while adjusted earnings per share was $2.81, up 6.8 percent from the prior-year period.
For fiscal year 2012, the company expects adjusted earnings in the range of $2.91 to $3.01, representing mid- to high-single digit growth. Street currently expect 2012 earnings of $2.98 per share.
In November, the board authorized the repurchase of up to $2.5 billion of the company's outstanding common stock over two-and-a-half years. The company repurchased 6.7 million shares for $276 million in the fourth quarter.
RAI is currently trading at $39.27, down $0.84 or 2.09%, on the NYSE. Over the past year, the stock traded in a range of $31.82 - $42.18.
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