CHARLOTTE, N.C. – R.J. Reynolds Tobacco Holdings Inc. said Friday its
second-quarter earnings rose as shipments declined to reflect lower
demand. The nation's second-largest cigarette company warned, however,
that its third-quarter profits may fall below expectations.
Net income for the Winston-Salem-based company in the second quarter was
$211 million, up from $127 million during the same period of 2001.
Earnings per share increased to $2.29 from $1.26.
Net sales were level with the year-ago quarter at $1.70 billion, due to
higher pricing, which was offset by lower volume and higher promotional
spending. Operating income for the second quarter was $372 million, up 4
percent from $357 million in 2001.
RJR's shares were down 40 cents at $51.58 each in early trading Friday
on the New York Stock Exchange.
"We met our objectives for the second quarter and took several steps to
enhance shareholder value," said Andrew J. Schindler, RJR's chairman and
chief executive officer.
In its earnings statement, RJR said it expects earnings per share for
the third quarter to rise to $2.20 to $2.30 a share, up from $2.14 a
year earlier. The average estimate of industry analysts surveyed by
Thomson First Call had been for earnings of $2.32 per share in the third
RJR said the company's previous full-year guidance was lowered slightly
to reflect the impact of the joint venture with Gallaher Group PLC to
market American-blend cigarettes, initially in four European countries.
There were other factors as well, Schindler said.
"Yesterday, one of our major competitors announced increased promotional
spending in the second half of 2002," he said. "The guidance ... is
based on current promotional trends and will be subject to further
evaluation given yesterday's announcement."
On Thursday, market leader Philip Morris said it would spend an extra
$350 million on marketing its premium cigarettes led by top-selling
RJR Tobacco's market share for the three-month period averaged 22.77, an
increase of 0.12 share points compared to the first two months of the
year. During the same period last year, its market share was 23.56.
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