Fourth-quarter earnings for cigarette maker
R.J Reynolds Tobacco Holdings
dove 49% vs. the prior year, matching Wall Street expectations, as lawsuit settlement costs continued to carve into the company's bottom line.
Reynolds' earnings slipped to $85 million, or 79 cents per diluted share, for the quarter, compared to $169 million, or $1.59 a share, for the year-ago period.
The company said tobacco settlement costs with states were a double whammy. In addition to the costs themselves, the company saw a drop in sales volume as settlement-related hikes in prices caused demand to drop off.
The company's fourth-quarter U.S. sales volumes fell 12.6% to 23.5 billion units, a reflection of the roughly 82-cent-per-pack price hikes that have rolled out since 1998.
Commenting on the sharp yet expected drop in earnings, RJR chief Andrew Schindler said in a statement that the quarter's results marked the beginning of a "period of transition resulting from the settlement agreement with certain states' attorneys general."
RJR said that it bought back about 2.7 million shares during the fourth quarter, worth about $55 million.
The Winston-Salem, N.C.-based company said that its Camel Filter brand performed best, mostly due to new marketing initiatives after it was persuaded to end its popular Joe Camel marketing earlier in the year
For 1999, RJR earned $369 million, or $3.40 per diluted share, a penny below analyst estimates. That compares to $591 million, or $5.44 per diluted share, in 1998.
The company's stock was up 5/16, or 2%, to 18 13/16 in early trading Thursday. (It closed up 1/16, or 0.34%, at 18 9/16.)