Reynolds American Inc., the tobacco company that agreed in July to buy US rival Lorillard Inc., posted third-quarter profits that beat analysts’ estimates, as higher prices offset lower cigarette volumes and investment in vapour alternatives.
Net income rose 2.2 per cent to $467 million, or 88 cents a share, from $457 million, or 84 cents, a year earlier, the Winston-Salem, North Carolina-based maker of Camel cigarettes said in a statement. Excluding some items, profit was 95 cents a share in the period, which ended 30 September. Analysts had estimated 91 cents on average, according to data compiled by Bloomberg.
Chief executive officer Susan Cameron, who returned from retirement, is seeking approval from US regulators for the largest tobacco merger in decades. The $25-billion transaction will help Reynolds cope with a shrinking cigarette market and compete with US market leader Altria Group Inc.
Excluding excise taxes, revenue rose 4.9 per cent to $2.24 billion. Analysts had estimated $2.19 billion on average. The company reaffirmed its July forecast of $3.35 to $3.45 a share in profit for the year. Analysts had estimated $3.39, on average. The shares rose 1.1 per cent to $59.13 in New York. Before that, Reynolds had risen 18 per cent this year, beating the 3-per-cent gain for the Standard & Poor’s 500 Index.
Philip Morris International Inc. reported quarterly profits last week that exceeded analysts’ estimates, as the world’s largest publicly traded tobacco company raised prices. The Marlboro maker, which gets all of its revenue outside the US, was spun off from Altria in 2008.
Even so, Philip Morris cut its profit forecast, citing currency headwinds. Earnings this year will be $4.76 to $4.81 a share, the New York-based company said. That compares with a July forecast of $4.87 to $4.97.
Bloomberg News, edited by ESM
