Sales Drop at R.J. Reynolds - TheStreet

Sales Drop at R.J. Reynolds

But the company says the market share of its four main brands rose.
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R.J. Reynolds Tobacco's


second-quarter earnings and sales declined as a result of lower volume and increased promotional spending, but the company said the combined market share of its four main brands rose sequentially and compared with last year.

The company earned $70 million, or 83 cents a share, in the second quarter, down from $211 million, or $2.29 a share, a year ago. Second-quarter 2003 earnings include a restructuring charge of 40 cents a share.

Reynolds said second-quarter sales fell 16% to $1.43 billion from $1.71 billion a year ago. Reynolds Tobacco's second-quarter shipment volume of 21 billion units was down 10.9% from the prior-year quarter because of a decline in consumption, as well as trade-inventory shifts.

"The comprehensive analysis of our business and cost structure that we announced in April is ongoing, and we are on track with the very aggressive timetable we set," the company said in a press release. "Some changes have already begun. We expect to make further, significant changes, begin implementing them, and announce a restructuring charge in the September/October timeframe."

In April, the company projected a full-year profit of $250 million, or $3 a share. Including the restructuring charge reported in the second quarter, but excluding future charges, Reynolds expects to earn $2.78 to $2.96 a share for 2003.

Analysts polled by Thomson First Call expected earnings of 84 cents in the second quarter. The full-year consensus forecast is $2.96.

Shares of Reynolds were losing 75 cents, or 2%, to $35.70 in recent

New York Stock Exchange