Reynolds CEO Reveals Future Growth Plans For Newport

Shares of tobacco giant Reynolds American, Inc. RAI jumped up to an all-time high on Tuesday on back of the company declaring better-than-expected earnings, announcing 2-for-1 stock split and increase in quarterly dividends.

Susan M. Cameron, Reynolds CEO, was on CNBC to discuss how much did the Newport brand (earlier owned by Lorillard) contributed to earnings and Reynolds future plans for the Newport brand.

Newport Didn't Have A Material Impact

Cameron was asked how much did Newport weighed in on second quarter earnings. She replied, "We actually closed the transaction on June 12th. So we had about two weeks worth of Newport's sales. The best way to think about it is that Newport added about 6 percent to net sales, about 6 percent to adjusted operating income."

She continued, "But that was offset by the incremental 183 million shares that we issued. So Newport didn't really have a material impact on the EPS in the second quarter. That was driven by the strong underlying business across the Reynolds' portfolio."

Future Plans For Newport

On the company's plans for Newport going forward, Cameron said, "As you know, we did just closed in the middle of June and the early transition has gone very well. We are spending time now to really get to know the Newport consumers and we are evaluating our opportunities for the brand portfolio."

"Very clearly though it has very strong geographic complementarity to the original Reynolds portfolio. Newport very strong in the East, Camel very strong in the West. We also have just about doubled the sales force from the Lorillard's sales force in terms of handling Newport in retail."

"So, we are very excited about the growth prospects. Newport picked up four-tenths of a share point year-over-year and we expect to energizing continue that momentum," Cameron said.