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Reynolds’ cigarette sales down sharply

| July 31, 2014

R.J Reynolds Tobacco’s domestic cigarette volume during the three months to the end of June, at 15.6 billion, was 8.3 percent down on that of the three months to the end of June 2013, 17 billion.
Pall Mall volume was down by 6 percent to 5.3 billion, Camel volume was down by 4.4 percent to 5.2 billion, and other-brand cigarette volume was down by 14 percent to 5.1 billion.
Reynolds’ share of the domestic retail cigarette market during the three months to the end of June, at 26.5 percent, was down by 0.1 of a percentage point from that during the three months to the end of June 2013.
Pall Mall’s share was up by 0.1 of a percentage point to 9.3 percent, Camel’s share was up by 0.4 of a percentage point to 10.2 percent, while the share of the company’s other-brand cigarettes was down by 0.6 of a percentage point to 7 percent.
Santa Fe’s cigarette (comprising the Natural American Spirit brand) volume during the three months to the end of June, at 1 billion, was up by 7.9 percent on that of the three months to the end of June 2013.
At the same time, Natural American Spirit’s share of the retail market increased by 0.2 of a percentage point to 1.6 percent.
American Snuff’s moist snuff volume during the three months to the end of June, at 121.2 million cans, was down by 0.5 percent on that of the three months to the end of June 2013.
Grizzly volume was down by 0.1 percent to 109.4 million cans, while other-brand volume was down by 3.6 percent to 11.8 million cans.
At the same time, American’s share of the moist-snuff retail market rose by 0.6 of a percentage point to 34.4 percent. Grizzly’s share was up by 0.7 of a percentage point to 31.4 percent, while the share of the company’s other moist snuff brands fell by 0.2 of a percentage point to 3 percent.
Reynolds American Inc. on Tuesday announced its second-quarter and half-year 2014 results.
Net sales for the three months to the end of June, at $2,162 million, were down by 0.8 percent from that of the three months to the end of June 2013.
Reported operating income was up by 4.8 percent to $836 million and adjusted operating income was increased by 1 percent to $808 million.
Reported net income was up by 6.7 percent to $492 million and adjusted net income was up by 2.6 percent to $474 million.
Reported net income per diluted share was up by 9.5 percent to $0.92 and adjusted net income per diluted share was up by 6 percent to $0.89.
“Reynolds American turned in an excellent second quarter, with higher earnings and margin reflecting continued strong performance by our reportable business segments,” said Susan M. Cameron, president and CEO of RAI.
“The environment remains very competitive, and I’m particularly pleased to report that all of our companies’ key brands gained market share.”
Meanwhile, Reynolds’ domestic cigarette volume during the six months to the end of June, at 29.9 billion, was 6.2 percent down on that of the six months to the end of June 2013.
Pall Mall volume was down by 3.3 percent to 10.1 billion, Camel volume was down by 1.2 percent to 10.2 billion, and other-brand cigarette volume was down by 13.5 percent to 9.7 billion.
Santa Fe’s cigarette (Natural American Spirit) volume during the six months to the end of June, at 1.8 billion, was up by 9.2 percent on that of the six months to the end of June 2013.
And American’s moist snuff volume during the six month to the end of June, at 238.1 million cans, was up by 4.7 percent on that of the six months to the end of June 2013.
Grizzly volume was up by 5.6 percent to 215.8 million cans, while other-brand volume was down by 2.7 percent to 22.3 million.

Lorillard volume shipments down

| July 31, 2014

Lorillard’s domestic-market wholesale cigarette shipments during the three months to the end of June, at 9,977 million, were down by 2.8 percent on those of the second quarter of 2013, 10,262 million.
Shipments of Newport were down by 1.9 percent to 8,524 million, while shipments of Kent and True, Lorillard’s other full-price brands, were down by 13.9 percent to 35 million and by 14.8 percent to 37 million, respectively.
In total, full-price brand shipments were down by 2.1 percent to 8,596 million.
Shipments of price/value brands were down by 6.9 percent to 1,381 million, with shipments of Old Gold down by 11.3 percent to 103 million and those of Maverick down by 6.6 percent to 1,277 million.
Lorillard’s shipments to Puerto Rico and U.S. possessions were down by 38.6 percent to 114 million; so domestic and overseas shipments, taken together, were down by 3.4 percent to 10,092 million.
Lorillard’s share of the U.S. domestic market during the second quarter, at 15 percent, was increased by 0.2 of a percentage point on that of the second quarter of 2013. Newport’s share was up by 0.3 of a percentage point to 12.8 percent.
The menthol cigarette share of the total U.S. market increased by 0.2 of a percentage point to 31.6 percent, and Lorillard’s share of the menthol segment increased by 0.3 of a percentage point to 40.3 percent. Newport’s share of the menthol segment rose by 0.2 of a percentage point to 37.1 percent.
Meanwhile, Lorillard’s domestic-market wholesale cigarette shipments during the six months to the end of June, at 18,815 million, were down by 2.5 percent from those of the first half of 2013, 19,306 million.
The company’s shipments of full-price brands were down by 1.8 percent to 16,213 million, with Newport’s shipments down by 1.7 percent to 16,075 million, Kent’s shipments down by 14.3 percent to 66 million and True’s shipments down by 12.8 percent to 72 million.
Shipments of price/value brands were down by 6.7 percent to 2,602 million, with shipments of Old Gold down by 11.3 percent to 194 million and shipments of Maverick down by 6.3 percent to 2,409 million.
Lorillard’s shipments to Puerto Rico and U.S. possessions were increased by 36.3 percent to 232 million, meaning that, overall, the company’s shipments were down by 3.2 percent to 19,048 million.
Net sales for the three months ended June 30, at $1,799 million, were down by 0.3 percent on those of the three months ended June 30, 2013.
Reported operating income was down by 1.5 percent to $532 million, while adjusted operating income was up by 0.6 percent to $532 million.
Reported net income was down by 4.2 percent to $300 million and adjusted net income was down by 1 percent to $304 million.
Reported diluted earnings per share (EPS) were unchanged at $0.83 and adjusted diluted EPS were up by 3.7 percent to $0.84.
Meanwhile, net sales for the six months ended June 30, at $3,391 million, were increased by 0.3 percent on those of the six months ended June 30, 2013.
Reported operating income was down by 8.8 percent to $1,004 million and adjusted operating income was up by 1.1 percent to $978 million.
Reported net income was down by 10.8 percent to $571 million and adjusted net income was down by 0.5 percent to $555 million.
Reported diluted earnings per share (EPS) were down by 7.1 percent to $1.57 and adjusted diluted EPS were up by 4.1 percent to $1.53.
“Lorillard continued to deliver industry-leading cigarette operating and market share performance in the second quarter and for the first half of 2014, while also making a significant investment to expand Blu eCigs in the U.K.,” said Murray S. Kessler, Lorillard chairman, president and CEO.
“Continued strong pricing realization and tight cost controls in our cigarettes segment allowed us to deliver solid adjusted cigarette operating income growth in the quarter and for the first half of the year.
“While second-quarter Blu eCigs’ sales were below expectations, recent new Blu product launches and the introduction of the Blu brand into the U.K. in the second quarter solidify Blu eCigs’ position as the U.S. market leader and the world’s first truly global e-cigarette brand and will result in accelerated sales going forward.”

China produces more cigarettes

| July 29, 2014

China’s tobacco companies produced more cigarettes even as the number of tobacco farms decreased in the first half of 2014, reports Xinhua News Agency quoting figures from the State Tobacco Monopoly Administration (STMA).

In the January-June period, Chinese cigarette manufacturers produced 1.3 million sticks, 0.2 percent more than in the first half of 2013. Meanwhile, the area of farming land dedicated to tobacco fell by 170,000 hectares to 1.23 million hectares, according to the STMA.

The tobacco industry generated RMB579.54 billion ($94 billion) in revenue for the Chinese government over the first half of 2014. Tobacco taxes constituted about 7.8 percent of China’s fiscal revenues during that period, according to the Finance Ministry and the STMA.

There are more than 300 million smokers in China

 

 

E-cigarettes not unbanned in Australia

| July 29, 2014

In Australia, it is illegal to sell electronic cigarettes to deliver nicotine, not because a bureaucrat has made a decision to ban them, but because no one has yet asked the right bureaucrat for permission, according to David Leyonhjelm, the Liberal Democrats’ senator for New South   Wales, writing in The Australian Financial Review.

‘It seems everything is illegal in Australia unless a bureaucrat gives permission, Leyonhjelm said. ‘What’s worse, you have to go to the trouble and expense of asking for permission, because if bureaucrats were proactive they would run the risk of serving the public.’

Leyonhjelm’s piece is at: http://www.afr.com/p/opinion/cigarettes_at_mercy_of_bureaucrats_eEi8fov0QbFpWgjd136uWJ.

Call for e-cigarette ban in Saudi Arabia

| July 29, 2014

A medical professor at King Saud University (KSU) has called for a ban on the sale of electronic cigarettes, at least in respect of those under the age of 18, according to a story in the Arab News.

Sultan Ayoub Meo, a professor at the KSU’s College of Medicine, said that electronic cigarette use should be regulated in the same way as traditional cigarette smoking is regulated.

“Retail outlets, including pharmacies, must not be allowed to sell it to children and adolescents,” he said.

Meo says he fears that “the huge rise in users could normalize smoking, and undo decades of anti-smoking education and campaigning”.

He pointed out that a number of countries had already banned electronic cigarette use and that some nations had restricted their sales.

France was preparing to place electronic cigarette use on the same legal footing as tobacco smoking was on.

SA looking at plain packs by next year

| July 29, 2014

South   Africa aims to force cigarette manufacturers to sell their products in standardized packs by next year, according to a story by Wendell Roelf for Reuters, quoting the country’s Health Minister, Aaron Motsoaledi.

The World Trade Organisation (WTO) is currently looking into complaints about the introduction of standardized packs in Australia, but Motsoaledi said he was “not even sure we can wait for that WTO decision”.

“We can start making preparations now,” he said.

“I want it as soon as possible but realistically and most probably it would be next year.”

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