Pall Mall Maker’s 1Q Revenue Dropped Over 28%

July 25th, 2014 00:00

Reynolds American's 1Q revenue dropped over 28 % as the company sold less cigarettes and spent significant amount on growing its electronic cigarette brand and on some other legal costs.

The world's second-largest cigarette company on Thursday revealed revenue of $363 million, for the first quarter of 2014. That figure is lower from $508 million, registered in the previous year. Adjusted revenue constituted 72 cents per share.

The manufacturer of Camel and Pall Mall cigarettes reported that earnings not including excise taxes have raised almost 3 %. The giant cigarette maker stated its R.J. Reynolds Tobacco branch sold approximately 14.3 billion cigarettes, a fall of around 4 %, in contrast to a predicted drop of 3 % for the industry in general.

Volumes for Camel increased 2.5 % while those for Pall Mall haven't changed. The brands represent over 60 % of the company's entire cigarette volume. Shipments of its other cigarettes like: Winston, Kool, Doral and Salem, dropped 13 %. Camel's market share has boosted to 10 % of the U.S. market, whilst Pall Mall's market share increased to just 9.5 %. The manufacturer has advertised Pall Mall as a less expensive cigarette especially for those smokers who are affected by the fragile economy and substantial unemployment.

Reynolds as well as other cigarette companies is also concentrating on tobacco alternatives like snuff or chewing tobacco as tax boosts, numerous smoking regulations and health concerns make the cigarette business more challenging. Volume for its smokeless tobacco products which include Grizzly and Kodiak went up around 11 % in comparison with the previous year.  The brands constituted a 34.6 % share of the U.S. retail market, even though that market is small is comparing with cigarettes.

The company explained that its new Vuse brand is going to be advertised greatly this coming summer. It wants to spend more on the brand, which is at the moment in Colorado and Utah, in order to expand in the second quarter. Reynolds American also reasserted that its full-year 2014 revenue outlook in the range of $3.30 and $3.45 per share. Industry experts estimate $3.37 per share.

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