By Tripp Mickle
Reynolds American Inc. on Thursday posted a 43% increase in fourth-quarter sales and forecast a double-digit increase in profit this year, reflecting the addition of Lorillard, acquired last year, and the benefits of being an all-U.S. company sheltered from foreign-currency swings.
The strong sales results were driven primarily by the Newport cigarette brand the tobacco company acquired in its $25 billion takeover of Lorillard. Reynolds, the nation's second-largest tobacco company behind Altria Group Inc., said Newport increased its market share to 13.6% from 13% in the quarter, helping overall cigarette volume increase 33.6% from a year earlier.
The volume increases and higher cigarette prices helped deliver $3.05 billion in sales, up from $2.13 billion a year earlier. The Winston-Salem, N.C.-based company posted a profit of $279 million, or 19 cents a share, up from $148 million, or 14 cents a share.
But Reynolds said it expects industry cigarette volumes to decline in the 2%-to-3% range this year, which signals a return to historic levels of decline. Last year, volumes dropped just 0.1% as lower gas prices put more money in consumers' pockets.
Despite that, Reynolds expects earnings this year of $2.25 to $2.35 per share, a 14% to 19% increase from 2015. The company also said it had lifted its quarterly dividend by 17%.
Reynolds's expectations and results contrast sharply with Marlboro-maker Altria Group, which last month missed Wall Street expectations and announced it would cut 5% of its workforce. The job cuts were designed to help the company save $300 million as it looks to meet its target of 7%-to-9% earnings growth in 2016.
During a call with analysts, Reynolds Chief Executive Susan Cameron credited the company's sales force for lifting Newport. Reynolds sales force is about 2,300 people, more than double the 1,000 previously working on Newport.
Newport's performance was offset by volume declines for Camel and Pall Mall of 2% and 3.5%, respectively. Ms. Cameron said Camel suffered from a Food and Drug Administration order in September that required it pull Camel Crush Bold from the market, reducing the brand's overall volume.
Volume of the company's Natural American Spirit brand, which includes higher-priced organic cigarettes, increased 18% in the quarter, helping boost the brand's market share to 2% from 1.7% in the year earlier period.
The company said it would boost its investment in its Vuse e-cigarette brand. Growing dissatisfaction with e-cigarettes like Vuse and inventory backlogs caused sales to slow last year, but Ms. Cameron said Reynolds's consumer data showed consumers continue to try the devices. The company announced last year it would release a refillable device and liquid nicotine product to compete with the products sold at vape shops, which claim about half the more than $2.5 billion e-cigarette market.
"We've gone a long way to meet what is really the consumer's dilemma, which is more satisfaction," Ms. Cameron said.
Chelsey Dulaney contributed to this article.
Write to Tripp Mickle at Tripp.Mickle@wsj.com