U.S. markets closed
  • S&P 500

    4,185.47
    +15.05 (+0.36%)
     
  • Dow 30

    34,200.67
    +164.68 (+0.48%)
     
  • Nasdaq

    14,052.34
    +13.58 (+0.10%)
     
  • Russell 2000

    2,262.67
    +5.60 (+0.25%)
     
  • Crude Oil

    63.07
    -0.39 (-0.61%)
     
  • Gold

    1,777.30
    +10.50 (+0.59%)
     
  • Silver

    26.04
    +0.08 (+0.29%)
     
  • EUR/USD

    1.1980
    +0.0004 (+0.04%)
     
  • 10-Yr Bond

    1.5730
    +0.0430 (+2.81%)
     
  • GBP/USD

    1.3840
    +0.0056 (+0.41%)
     
  • USD/JPY

    108.7830
    +0.0670 (+0.06%)
     
  • BTC-USD

    60,976.60
    -900.77 (-1.46%)
     
  • CMC Crypto 200

    1,398.97
    +7.26 (+0.52%)
     
  • FTSE 100

    7,019.53
    +36.03 (+0.52%)
     
  • Nikkei 225

    29,683.37
    +40.68 (+0.14%)
     

Why Did Reynolds American’s 1Q16 Revenue Increase?

Penny Morgan

Reynolds American's Update on Developing Broad Brand Strategies

(Continued from Prior Part)

Reynolds American’s 1Q16 revenue highlights

Reynolds American’s (RAI) reported revenue increased by 41.8% to $2.9 billion in 1Q16 compared to $2.1 billion in 1Q15. The increase was primarily due to Reynolds American’s increased cigarette volume of 34.2% in 1Q16, largely driven by the addition of the Newport brand.

However, after beating the consensus estimates last quarter, Reynolds American’s revenue missed Wall Street expectations in 1Q16. The consensus has projected revenue of slightly over $2.9 billion.

Volume and market share

The total industry cigarette volume increased by 0.4% during the quarter. This was partly driven by improved economic factors and lower gas prices, which benefited the disposable income of adult tobacco consumers. After adjusting the wholesale inventory changes, industry shipments fell flat in 1Q16. However, total RAI’s domestic retail (XRT) market share increased by 0.3% to 34.6% in 1Q16.

Similarly, Altria Group’s (MO) 1Q16 net revenue of excise taxes increased by 6.0% to $4.5 billion. However, Philip Morris’s (PM) 1Q16 revenue excluding excise taxes fell by 8.1% to $6.1 billion. Excluding the adverse impact of foreign currency, net revenue increased by 2.4% in 1Q16. Vector Group’s (VGR) 1Q16 pro forma adjusted revenue also fell by 11.7% to $0.3 billion.

RAI’s peers British American Tobacco (BTI) and Japan Tobacco (JAPAF) (JAPAY) release their results on a yearly basis.

Revenue growth opportunities

Reynolds American’s (RAI) completion of Lorillard’s acquisition and related divestitures to Imperial Tobacco (ITYBY) and the integration of the Newport brand has helped RJR Tobacco to identify new revenue opportunities and expanded presence to drive further growth.

In addition, the vapor collaboration between RJR Tobacco and British American Tobacco (BTI) will facilitate RAI’s efforts to efficiently meet the preferences of adult tobacco consumers in a rapidly evolving marketplace.

In the coming parts of this series, we will focus on Reynolds American’s four operating segments’ 1Q16 revenue and income.

RAI comprises 0.9% of the WisdomTree High Dividend Fund ETF (DHS).

Continue to Next Part

Browse this series on Market Realist: