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Imperial backs environment project

| February 14, 2014

Imperial Tobacco is supporting a wildlife conservation project to help save endangered species in the Philippines.

The company, which has its headquarters in Bristol, U.K., is backing a scheme led by the Bristol Zoo to preserve the unique forest habitat of the island of Negros.

During their time in the Philippines, the zoo’s Neil Maddison and Nigel Simpson met with the factory management team at Imperial’s Philippine Bobbin Corp. subsidiary near Manila to explain how the project team was working with the local community to ensure that residents and wildlife could live alongside each other.

“We have employees here who come from Negros and are keen to help support these activities,” said factory manager Carlos Saez-Diez Reberdito.

“The work not only focuses on the conservation of endangered species but also the island’s environment and people.”

Lorillard’s volumes beating the market

| February 13, 2014

Lorillard’s domestic shipment volumes during the 12 months to the end of December, at 39,325,216,000, were down by 0.4 percent on those of 2012.

Including shipments to Puerto Rico and U.S. possessions, shipments were down by 0.5 percent to 39,947,512,000.

Shipments of Newport cigarettes increased by 0.7 percent to 33,352,162,000, and shipments of full-price brands taken together increased by 0.5 percent to 33,668,164,000; with shipments of Kent down by 13.5 percent to 151,524,000 and shipments of True down by 11.9 percent to 164,478,000.

Shipments of price/value brands decreased by 5.8 percent to 5,657,052,000, with shipments of Old Gold down by 11.6 percent to 436,992,000 and shipments of Maverick down by 5.3 percent to 5,220,060,000.

Lorillard’s market share during 2013, at 14.9 percent was up by 0.5 of a percentage point on that of 2012, with Newport’s share up by 0.6 of a percentage point to 12.6 percent.

Menthol cigarettes last year held a 31.4 percent share of the U.S. market, up by 0.3 of a percentage point from that of the previous year, and Lorillard held a 40.3 percent share of the total U.S. menthol segment, up by 1 percentage point. Newport’s share of the U.S. menthol segment was 37.1 percent, up by 1 percentage point.

Meanwhile, during the three months to the end of December, Lorillard’s domestic cigarette shipments, at 9,748,031,000, were down by 1 percent on those of the three months to the end of December 2012, 9,846,815,000. Including Puerto Rico and U.S. possessions, shipments were down by 1.6 percent to 9,850,979,000.

Newport’s shipments during the final quarter were up by 0.4 percent to 8,298,209,000, and total full-price brand shipments were up by 0.2 percent to 8,372,585,000. Total price/value brand shipments were down by 7.9 percent to 1,375,446,000.

Lorillard’s net sales during the 12 months to the end of December, at $6,950 million, were up by 4.9 percent on those of the previous 12 months period.

Reported operating income was up by 10.4 percent to $2,074 million, while adjusted operating income was up by 7.8 percent to $2.030 million.

Net income was up by 8.5 percent to $1,192 million, while adjusted net income was up by 5.9 percent to $1,168 million.

Reported diluted earnings per share were up by 13.2 percent to $3.18, while adjusted diluted earnings per share were up by 10.6 percent to $3.12.

Lorillard had delivered industry-leading, double-digit earnings-per-share growth and its 11th consecutive year of market share growth in 2013, while making investments in e-cigarettes and new cigarette products, and making process changes to smooth wholesale inventory fluctuations in the fourth quarter, said Murray S. Kessler, chairman, president and CEO.

“These investments, combined with the remarkable strength and loyalty of the core Newport brand, give us confidence in our ability to deliver on our stated goal of a double-digit total shareholder return as measured by EPS growth and the dividend yield once again in 2014 and for many years to come,” he said.

Volume down but revenue up at Imperial

| February 13, 2014

Imperial Tobacco’s tobacco-products volume during the three months to the end of December (Imperial’s Q1) was down by 11 percent on that of the three months to the end of December 2012, according to an interim management statement issued this morning.

Tobacco products here include cigarettes, fine-cut tobacco, cigars and snus.

Tobacco net revenue, meanwhile, was increased by 1 percent to £1,564 million.

“We continue to implement our strategy, strengthening the sustainability and quality of our sales growth,” said CEO Alison Cooper.

“We are focusing on driving our growth brands and targeting opportunities in our growth markets, complemented by resilience in our returns markets.

“The quality of our business continues to improve, with encouraging results from our growth brands which have outperformed the market.

“The quarter has also seen significant progress with our stock optimization program, reducing trade stocks and improving our flexibility and speed to market.

“These results are in line with our expectations.

“We will continue driving our strategy this year, stepping up our investments behind quality growth.

“There is further stock optimization work to be done, whilst our cost optimization program is on track and will contribute toward our investment plans.

“A reasonable working assumption for the full year continues to be for modest growth in EPS at constant exchange rates and for at least a 10 percent increase in dividends.”

Automating e-cigarettes out of China

| February 13, 2014

Freedom Smokeless has unveiled its new, U.S.-built, high-speed e-cigarette automation machinery at the TPC [Tobacco Plus Convenience Expo] 2014 show in Las Vegas.

In a press note issued yesterday through PRNewswire, Freedom, which is an e-cigarette manufacturer based in southern California, said that it was the first U.S.-based company to offer automatic machinery that could provide for affordable cartridge filling, e-cigarette assembly and packaging.

The machinery was designed “to bridge the gap from China to America,” it said.

The first of six machines had been installed in Freedom’s FDA-registered, ISO- and GMP-compliant facilities, the press note said.

By May, all six automated lines would be up and running with the capacity of producing more than 4 million units a week.

“The response at the recent TPC show was overwhelming,” said Glenn Kassel, Freedom’s president and co-founder.

“When watching the video of our automated production, people were amazed that we had developed such sophisticated technology, especially our built-in quality assurance features.”

English smokers fall below 20 percent

| February 13, 2014

The smoking prevalence in England has fallen below 20 percent for the first time in about 80 years, according to a report posted on the BMJ website, quoting research carried out at University College, London.

The latest figures come from a large national surveillance study that has been tracking smoking prevalence in England since 2006.

Each month, a representative sample of about 1,800 people aged 16 years or older is randomly selected to complete a computer-assisted survey with a trained interviewer.

In 2013, 22,167 adults were surveyed, and the prevalence of cigarette smoking was found to be 19.3 percent.

More detailed data are available at www.smokinginengland.info.

TRP and Kentucky Cut Rag complete merger

| February 12, 2014

Tobacco Rag Processors (TRP) and Kentucky Cut Rag, a wholly owned subsidiary of G.F. Vaughan Tobacco Co., have completed merger of their cut-rag operations. The combined company will operate out of Tobacco Rag’s Wilson, North Carolina, USA, headquarters. Derek Vaughan and Conrad Whitaker will join Tobacco Rag as consultants under long-term agreements.

“We are extremely pleased with the combination of our two businesses,” says TRP CEO Davis Miller. “Kentucky Cut Rag and its team are well known in the industry for providing top-quality blends and excellent customer service. The addition of Derek and Conrad to our team as well as a stronger partnership with Vaughan Tobacco Company further ensures our access to top-quality Brazilian and U.S. tobaccos, enabling us to continue providing our customers with consistent blends at competitive prices.”

“We at Vaughan Tobacco Company are excited with the merger of Kentucky Cut Rag and Tobacco Rag,” says Derek Vaughan, CEO of G.F. Vaughan Tobacco Co. “Our two companies share common values and a strategic vision of innovation and quality-driven performance aimed at helping our customers deliver superior products and reduce costs in a competitive market.

“Our customers will benefit from the investments Tobacco Rag has made in a state of the art dry-ice expanded tobacco operation, upgraded primary equipment and an enhanced blend development and quality control team. Conrad and I are excited to be a part of the team that will continue to lead the cut-rag industry for years to come.”

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