Reynolds Continues to Draw on Newport -- Earnings Preview

By Tripp Mickle 

Reynolds American Inc. is scheduled to announce fourth quarter earnings before the market opens Thursday. Here's what you need to know:

EARNINGS FORECAST: Net income of 50 cents a share is the consensus of analysts surveyed by Thomson Reuters, compared with 28 cents reported a year earlier.

REVENUE FORECAST: Revenue of $3.0 billion is forecast, compared with $2.13 billion reported for the period a year earlier.

WHAT TO WATCH:

MAKE IT MENTHOL: The addition of Newport, which entered Reynolds's portfolio as part of the acquisition of Lorillard Inc. that closed in June, is expected to boost the company's sales and market-share gains for the quarter. The biggest potential gains from the brand are expected in the months ahead as a standstill agreement comes to an end and the company can begin to cut new contracts with retailers for Newport and other brands.

NATURAL AMERICAN: The company last month closed its $5 billion sale of global rights to Natural American Spirit to Japan Tobacco in a deal that was expected to deliver $3.2 billion after taxes. The company this month said it would pay down up to $2.8 billion of debt, which analysts believe came from proceeds to Japan Tobacco. What does it plan to do with any remaining proceeds from the sale?

VAPED OUT: Sales of the company's e-cigarette brand Vuse slowed late last year. The company announced late last year that it is adding Bluetooth connectivity to the devices to help consumers track battery life on their smartphone. It also plans to release a liquid-based tank system that will compete with the vaporizers that claim about half of the e-cigarette industry's estimated $3.5 billion in sales. But will those innovations help reverse recent sales trends?

Write to Tripp Mickle at [e-mail]

(END) Dow Jones Newswires

February 10, 2016 16:42 ET (21:42 GMT)

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