Reynolds American has been awarded membership in the 2014-2015 Dow Jones Sustainability North America Index, effective Sept. 22, 2014.
Reynolds American is one of only 149 North American companies on the index, which is used by many investment portfolio managers when making investment decisions. Previously, the company was a member of the index from 2009 through 2013.
Companies are selected based on an extensive evaluation of many criteria, including corporate governance, risk management, energy consumption, climate change strategies, supply chain standards and human resources development.
Reynolds American Inc. said yesterday that its board of directors had approved a 6.8 percent increase in the quarterly cash dividend on the company’s common stock, taking it from $0.59 per share ($2.36 per share annualized) to $0.63 per share ($2.52 per share annualized).
The dividend will be payable on July 1 to shareholders of record on June 10.
“This increase is in line with the company’s policy of returning about 80 percent of net income to shareholders in the form of dividends, and underscores our commitment to returning value to shareholders,” said CFO Thomas R. Adams.
Consumers squeezed by higher gas prices and an increase to the payroll tax led Reynolds American Inc. to report a sharp drop in cigarette volumes in the first quarter.
“Overall, the external environment remained challenging,” President and CEO Daniel Delen said. “Industry cigarette volumes were negatively impacted by higher energy prices, the expiration of the payroll-tax holiday and fewer shipping days,” according to a story posted on 4-traders.com.
Profit, meanwhile, jumped 88 percent in the quarter due to lower costs and a $202 million credit tied to a landmark tobacco settlement. Adjusted profit was higher than Wall Street expected, aided by higher cigarette prices and strong demand for smokeless products, though the decline to net sales was worse than anticipated.
Reynolds American and rival tobacco companies face a difficult operating environment as cigarette volumes have been declining for years. A weak economy and high unemployment have continued to pressure consumers’ disposable income. But an estimated 6.2 percent drop to cigarette volumes in the first quarter was more bruising than historical trends, with declines generally averaging 3 percent to 4 percent in recent years. Domestic cigarette shipment volume at the R.J. Reynolds unit fell 8.7 percent in the first quarter, though when adjusting for the two fewer shipping days, the company estimates its cigarette volume dropped about 5.6 percent.
The company’s total cigarette retail market share dropped to 26.1 percent from 26.7 percent, the eighth consecutive year-over-year decline.
Camel and Pall Mall, the company’s core brands, performed better than the overall cigarette unit. Volumes slid 5.5 percent for Camel and 2 percent for Pall Mall, and both posted higher market share. Together, they represent more than two-thirds of the company’s total market share.
When the three major U.S. tobacco companies report their first-quarter results this week, investors can find comfort in two themes that have remained consistent for years: Cigarette volumes will fall, but profits will rise, according to a story in The Wall Street Journal.
For the past three years, cigarette volumes have dropped around 3 percent to 4 percent annually, and analysts who follow the sector expect that trend to continue as more Americans quit smoking. But market leader Altria Group Inc. and smaller rivals Reynolds American Inc. and Lorillard Inc. keep posting higher core profits.
Analysts expect both trends will continue as all three companies are projected to report modestly higher earnings for the first quarter, though volume could decline more steeply than historical trends, due to higher payroll taxes and still-high unemployment.
The tobacco industry’s ability to consistently raise list prices and aggressively buy back shares have been the greatest drivers to their profitability gains. Smokeless tobacco products, including snuff and snus, have seen higher demand to help offset declining demand for traditional cigarettes. Lorillard and Reynolds are also in the early stages of selling e-cigarettes, which both have said offer potential for long-term growth. Battery-powered e-cigarettes turn heated nicotine-laced liquid into a vapor mist, and come in several flavors.
Reynolds American Inc. is due to host a conference call and webcast following the release of first-quarter 2013 financial results before the market opens on April 23.
The company’s president and CEO, Daniel M. Delen, its CFO, Thomas R. Adams, and its vice president of investor relations, Morris L. Moore, will speak during the conference call and webcast, which will start at 09.00 hours Eastern Time.
Registration for the event, which will be available at www.reynoldsamerican.com on a listen-only basis, is now open. A replay of the conference call will be available at the same website.
The call-in numbers are (877) 390 5533 (toll-free) and (678) 894 3969 (International).
Reynolds American Inc. has been awarded membership in the 2012-2013 Dow Jones Sustainability North America Index, effective Sept. 24, 2012. This is the fifth consecutive year that the company has been recognized this way.
Reynolds American is one of 140 North American companies on the index, which is used by many investment portfolio managers when making investment decisions.
Companies are selected based on an evaluation of many criteria, including corporate governance, risk management, energy consumption, climate change strategies, supply chain standards and human resources development.