Reynolds American Revenue Rises on Higher Pricing

By Features Dow Jones Newswires

Reynolds American Inc.'s (RAI) revenue grew 6.3% in the March quarter due to higher pricing that offset declining volumes.

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Results beat Wall Street expectations, sending shares up 1.7% in light premarket trading.

Reynolds is in the midst of a $25 billion acquisition of Newport cigarette maker Lorillard Inc. Both companies' shareholders have approved the deal, though the Federal Trade Commission's review continues. Reynolds said the deal should close by midyear.

The tie-up comes as Reynolds struggles with diminishing demand for cigarettes alongside growth in the market for electronic cigarettes. The company just finished the national rollout of its Vuse electronic cigarette.

For the quarter ended March 31, Reynolds said cigarette shipments at its RJR Tobacco unit, which includes brands like Camel and Pall Mall, fell 2.4%, while RJR's market share fell by 0.5 percentage points to 26.1%.

Overall, Reynolds posted earnings of $389 million, or 73 cents a share, up from $363 million, or 67 cents a share, in the prior-year period.

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Excluding a one-time benefit and other items, per-share earnings were 86 cents, up from 72 cents a year ago.

Revenue grew 6.3% to $2.06 billion.

Analysts polled by Thomson Reuters projected 80 cents a share in earnings and $1.98 billion in revenue.

The company reaffirmed its full-year guidance.