R.J. Reynolds Tobacco Holdings

(RJR)

said its third-quarter net profit rose 17%, but that full-year earnings will be below expectations, due to increased promotional spending.

The company posted net of $139 million, or $1.56 a share, up from $119 million, or $1.22 a share, a year earlier. Excluding $91 million in amortization expense, income in the 2001 period would have been $209 million, or $2.14 a share.

Analysts polled by Thomson First Call were expecting earnings of $1.54 a share.

Sales fell 2.6% to $1.59 billion from $1.63 billion.

Reynolds now expects 2002 net income of $550 million to $580 million, or $6.05 to $6.40 a share, down from its September forecast of $620 million to $660 million, or $6.85 to $7.30 a share.

Analysts expect full-year earnings of $6.36 a share, according to Thomson Financial/First Call.

The tobacco company is under increasing pressure from generic competition.