Posted on 12/04/2002 7:25:39 PM PST by SheLion
RJ Reynolds said it would cut 8 per cent of its workforce, take a $145m charge and sell two businesses in the latest sign of the pressure big cigarette companies are under from cut-price brands.
The number-two US tobacco company also narrowed its 2002 earnings forecast to $6.05-$6.10 a share, from its previous $6.05-$6.40. That was below Wall Street consensus forecasts of $6.14.
Premium brand manufacturers such as RJ Reynolds and Philip Morris are suffering after a record number of excise tax increases by US states this year.
They have also pushed through aggressive price increases in recent years, partly to pay for the costs of their $246bn settlement of legal action with US states in 1998.
That has helped deep- discount brands, many of which did not exist a few years ago, to accelerate their market share gains this year. They now account for more than 10 per cent of the market.
Some of the discount brand manufacturers are not making payments under the 1998 settlement.
Philip Morris, the world number one, cut its 2002 earnings forecast in September and last month backed away from its forecast for next year amid heavy promotional spending to support its premium brand, Marlboro.
Andrew Schindler, RJ Reynolds chief executive, said these factors had combined to create a "significantly more challenging business environment".
The maker of Camel and Winston said it would cut about 635 full-time jobs, including 520 lay-offs and 115 through attrition. It would also sell its packaging and botanical-extraction divisions.
It would take a $235m pre-tax charge, or $145m after taxes, in the fourth quarter, including $95m associated with the workforce reduction.
The job cuts were expected to lead to savings of $50m next year, and $75m in 2004.
"The decisions regarding job eliminations and divestitures have been very difficult, but the realities of today's cigarette marketplace demand that we realign our cost structure," Mr Schindler said.
The market reacted positively to the cost cuts. RJ Reynolds shares closed up nearly 5 per cent at $40.76.
The lawmakers have now taken jobs from the tobacco company. The states raising the taxes on cigarettes to ungodly levels have forced smokers to go elsewhere.
Now, we have MORE people out of work! Hope the state Governments are happy now!
Thank God for the Reservations, the Internet and Roll Your Owns!
I am a huge Nascar fan, one wonders how long Winston can keep paying out large sums at the end of the year. Plus the Million dollar bonus. Glad to see you back SheLion, keep these posts coming.........
No, Reynolds made a preliminary anouncement about a month ago that I posted (R.J. Reynolds to Slash N.C. Jobs).
They've apparently completed more thorough cost analysis, and SheLion's article now contains more detailed information.
Hi SheLion! I knew you had too much spunk to let them stop ya.
Those people you're calling Conservative Anti's have a wide streak of Facist Control Freak in them and we also have pro-smokers with a touch of Control Freak in them.
But you knew that...
;O)
The destruction of American industry is what this is really about--and always has been. It's never really been about smoking.
Wow, glad you're back!
How long before the parasite completely devours the host?
Too bad the tobacco companies didn't fight in the beginning instead of going along with the Mafioso tactics of Big Health and the Smoking Taliban.
jdontom, that's the first thing hubby said last night when he read this article. NASCAR Banquet is tomorrow night, and you know, year-after-year, RJR is a HUGE donator to the NASCAR people. I have NO idea what will happen about this.
The anti's already took away tobacco sponsorship for race teams, and now they are taking away jobs at tobacco companies. It's unreal how special interest groups can restrict and control a legal commodity. Just mind boggling!
PUFF THE MAGIC DRAGON DOES NOT LIVE IN LEGAL TOBACCO LEAVES.
'Ell yes! Heck, OUR tobacco comes from over seas! And we roll our own. It's a shame what "they" are doing to Big T, but if Big T would have stuck up for themselves and the smokers, they wouldn't be in this mess.
Big Alcohol sure isn't taking any guff!
Thanks, Freeper Sis! It really got to me last week, and I had to take a break. But! I'm back! This is what I DO!!!!! 
Look at that smiley face I found. Nuts, eh? LOL!
Too bad the tobacco companies didn't fight in the beginning instead of going along with the Mafioso tactics of Big Health and the Smoking Taliban.
THANK you, Freeper, Sis! They will never devour me, but there was just too many "Conservative Anti's" in here last week, which really had me depressed. But, to each their own.
And your right: if Big T hadn't fallen to their knees in front of the Attorney Generals, none of us would be in this mess. Every state is raising cigarette taxes through the roof, and people are shopping elsewhere to avoid the high taxes. Which in turn, effects Big T. Pity, that so many more are losing their jobs. Our economy is in a sad state. But........the anti's are happy, I am sure. 
Big T's stocks are up, though. Go figure.
We aren't smoking any more or any less then we ever did. BUT, when cigarette taxes put a carton of cigarettes up to $44 to $50 dollars each, we decided that enough was enough.
Now we roll our own. For under $8 dollars, we have a beautiful carton of cigarettes, and now we have more money for Christmas presents for the family! 
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