R.J. Reynolds ( RJR) said first-quarter earnings shot up almost 72% from a year ago despite flat revenue, as a massive cost-cutting campaign bore considerable fruit.

The cigarette maker earned $122 million, or $1.43 a share, in the latest quarter compared with earnings of $71 million, or 84 cents a share, a year ago. Revenue was unchanged at $1.22 billion. Analysts surveyed by Thomson First Call had been forecasting earnings of 97 cents a share on revenue of $1.08 billion in the 2004 quarter.

The company also raised its estimates for the full year, saying it expects to earn $405 million to $435 million, or $4.75 to $5.10 a share, compared with analysts' estimates for earnings of $4.89 a share on revenue of $4.61 billion. It cited sharper-than-expected cost reduction of $450 million, up from $400 million.

The most recent quarter's earnings increase reflected a 2-year-old cost-reduction campaign. The company actually saw tobacco volume slide 6.4% in the first quarter, driven by declines in its discount brands. The company's full-price volume was up 2.1% from a year ago thanks to a 9.1% rise in Camel filters.

RJR said its share of U.S. retail cigarette sales was 21.53% in the quarter, down 1.39 share points from a year ago, mostly because of a decline in its discount shares. Camel and Salem saw share increases.

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