FOURTH-QUARTER EARNINGS DROP FOR RJR

Cigarette Shipments Down Ahead of Industry Average

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CHICAGO (AdAge.com) -- R.J. Reynolds Tobacco Holdings reported a 2.1% drop in fourth-quarter net income, to $89 million from $91 million the year earlier.

The company, which operates No. 2 cigarette maker R.J. Reynolds Tobacco Co. and the recently acquired Santa Fe Natural Tobacco Co., attributed the drop to a decline in shipment volumes, increased promotional spending and lower interest income.

Shipments of

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premium-priced cigarettes including Camel and Winston fell 9.2% in the fourth quarter, compared with an industry-wide drop of 5.5%. RJR's shipments of discount cigarettes including Salem and Doral fell 11.7% for the quarter, compared with the industry decline of 4%.

The cigarette maker reported a 10% rise in full-year 2001 net income to $444 million from $404 million and a 6.5% increase in 2001 net revenue to $8.58 billion from $8.05 billion the year earlier.

R.J. Reynolds Tobacco Holdings said it predicts 2002 net income to be between $745 million and $755 million.

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