News

Reynolds American Claimed a 28.5 % Drop in Net Revenue

July 25, 2014
tobacco

Reynolds American had shown in the 1Q a determination to admit lower short term earnings in hopes of gaining longer-term product variety and financial steadiness. The maker claimed Thursday a 28.5 % drop in net revenue to $363 million.

Stephen Pope, chief worldwide market strategist with Cantor Fitzgerald Europe, stated the all round revenue decrease "is a sign of the stresses that experience tobacco manufacturers throughout the developed world."

"Sales of conventional products are decreasing on a quarterly schedule with a worrying frequency. All round sales increased 2.8 % to $ 1.93 billion, with all running divisions revealing amplified profits.
Nevertheless, the profit increase was compensated by the cost of products leaping 34 % year over year to about $930 million. Other costs increased by 37.2 % to $413 million.
Camel edged back well before Pall Mall for third place in cigarette market share at about 10 % to 9.5 %, correspondingly. Each of the cigarette brands acquired market share year over year even as their mixed shipment volumes hardly improved.

These cigarette brands keep on following Philip Morris USA's Marlboro and Lorillard's Newport.

General shipments decreased by 3.8 % year over year to approximately 14.3 billion cigarette sticks. Reynolds' entire share of the cigarette market went up to 26.7 % in contrast to previous year, which include Camel and Pall Mall who have a merged 19.4 % market share.

Reynolds explained a part of the market share profits probably came from a conclusion by the group that advises market share to put more focus on sales from convenience stores and gasoline stations, where the bulk of smoking products are purchased.
Bonnie Herzog, an expert with Wells Fargo Securities, stated she was not worried about Reynolds lacking revenue estimations as a result of the market share boost in its four key cigarette brands."
Reynolds refused to comment on the possible agreement with Lorillard, which has been considered for over two months.
Christopher Growe, an expert with Stifel Nicolaus, declared that there is a low possibility in Reynolds buying Lorillard or being acquired by British American Tobacco."