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Tag Archives: Reynolds American Inc

Ratings Rationale in Tobacco Industry

Standard and Poor’s rates the securities maturing in 2016 through 2023 A, or five steps below top grade; those due in 2024 through 2033 A-, one level lower; and the 2035 maturity BBB+. The ratings reflect the likelihood of timely payments, tobacco company credit quality, the deal’s structure and the presence of about $57.3 million in a liquidity reserve account, S&P said.

The 1998 accord that 46 states struck with Phillip Morris USA (PM), Reynolds American Inc. (RAI) and Lorillard Inc. (LO) required the companies to pay more than $200 billion to resolve their liability in litigation over health costs related to smoking cheap cigarettes. About $101 billion of municipal debt is backed by the payments, which are based on cigarette shipments.

Tobacco munis produced a 0.48 percent year-to-date total return through June 20, compared with a 2.13 percent loss for the broad muni market, according to Barclays Capital indexes.

A Louisiana tobacco bond maturing in May 2039 traded June 21 at an average yield of 5.88 percent, with the spread averaging 2.16 percentage points over benchmark munis of the same maturity, according to data compiled by Bloomberg. On Jan. 2, the tobacco bond had an average yield of 3.73 percent, a risk premium of 1.03 percentage points.

 
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Posted by on June 25, 2013 in Tobacco Facts

 

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RAI shows off Natural American Spirit

R.J. Reynolds‘ domestic cigarette volumes for the 12 months to the end of December, at 72.9 billion, were 6.0 per cent down on those of the 12 months to the end of December 2010.

Excluding private label brands, volumes were down by 5.1 per cent to 72.6 billion.

Within Reynolds’ ‘growth brands’, Pall Mall volumes increased by 8.0 per cent to 21.7 billion, but Camel filter volumes fell by 1.8 per cent to 21.2 billion. Overall, growth brand volumes increased by 2.9 per cent to 42.9 billion.

Reynolds American
Reynolds American, Inc. Headquarters – Winston-Salem, NC.

Support brand volumes fell by 14.1 per cent to 26.9 billion and non-support brand volumes dropped by 31.7 per cent to 3.1 billion.

RAI’s domestic cigarette volumes during the three months to the end of December, at 17.5 billion, were down by 7.4 per cent on those of the three months to the end of December 2010, with total growth brand volumes down by 1.8 per cent to 10.5 billion, support brand volumes down by 13.2 per cent to 6.4 billion, and non-support brand volumes down by 25.4 per cent to 0.7 billion.

Reynolds’ market share during the 12 months to the end of December, at 27.4 per cent, was down by 0.7 of a percentage point; or down 0.3 of a percentage point to 27.3 per cent excluding private labels.

Reynolds’ share of the growth brand segment was increased by 1.3 percentage points to 16.4 per cent, while its share of the support brand segment fell by 1.3 percentage points to 9.9 per cent, and its share of the non-support brand segment fell by 0.6 of a percentage point to 1.1 per cent.

In announcing its full year and final quarter results, Reynolds American Inc, for the first time, highlighted Santa Fe volumes and retail share. Santa Fe’s Natural American Spirit recorded volumes during the 12 months to the end of December at 2.8 billion, up by 13.5 per cent on those of the 12 months to the end of December 2010, while the brand’s volumes during the final quarter of 2011, at 0.7 billion, were up by 13.8 per cent on those of the final quarter of 2010.

Natural American Spirit’s market share during the 12 months to the end of December 2011, at 1.0 per cent, was up by 0.2 of a percentage point.

Meanwhile, RAI’s American Snuff volumes during the 12 months to the end of December, at 404.7 million cans, were up by 7.3 per cent on those of the 12 months to the end of December 2010.

Grizzly volumes were up by 9.4 per cent to 355.8 million cans, Kodiak volumes were down 3.8 per cent to 45.7 million cans, and other brand volumes were down by 29.3 per cent to 3.2 million cans.

American Snuff’s market share during the 12 months to the end of December was up by 1.2 percentage points to 31.5 per cent, with Grizzly’s share up 1.6 percentage points to 27.7 per cent, Kodiak’s share down 0.3 of a percentage point to 3.6 per cent, and other brand’s share down 0.1 of a percentage point to 0.2 per cent.

RAI’s net sales for the 12 months to the end of December, at $8,541 million, were down by 0.1 per cent on those of the 12 months to the end of December 2010, while net sales for the three months to the end of December, at $2,083 million, were up by 0.1 per cent.

Full year and final quarter reported net incomes were up by 25.4 per cent to $1,406 million, and 16.0 per cent to $304 million respectively. And adjusted net income was up by 7.4 per cent to $1,647 million and by 12.9 per cent to $420 million respectively.

Reported net income per diluted share was up by 25.0 per cent to $2.40 and by 15.6 per cent to $0.52 respectively, while adjusted net income per diluted share was up by 6.8 per cent to $2.81 and by 12.5 per cent to $0.72.

Commenting on RAI’s results, president and CEO, Daniel M. Delen, said the tobacco company had finished the year with solid results despite the challenging economic and competitive environment.

“I’m pleased to report that RAI continued to make progress in the fourth quarter, increasing earnings and margins while further demonstrating our commitment to returning value to shareholders with the launch of a $2.5 billion share repurchase program,” he said. “RAI also increased its dividend again in the quarter, bringing the total dividend increase for 2011 to 14.3 per cent.

“We have elected to break out Santa Fe’s domestic operations as a reportable business segment, reflecting their strong growth over the past several years.

“With the company’s increasing contribution to RAI, we felt the time was right to give greater visibility to its outstanding performance.”

Looking to the future, Delen said that the company intended to sustain its operating companies’ key-brand momentum, invest in innovation and have the financial flexibility to take advantage of competitive opportunities.

“As a result, we believe it is prudent to once again review key activities and resources to ensure they are aligned with today’s economic and competitive landscape,” he said.

“A comprehensive analysis of programs, activities and organizational structures at RAI, RAI Services and most departments within R.J. Reynolds is currently under way. This review is expected to be completed by the end of the first quarter.”

 
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Posted by on February 10, 2012 in Tobacco News

 

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