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Jump to full article: Business Wire, 2009-06-24
Intro: -Fitch Ratings has affirmed the ratings of Reynolds American Inc. (NYSE: RAI) and R. J. Reynolds Tobacco Holdings, Inc., a wholly owned subsidiary of RAI, as follows: . . .
The affirmation reflects RAI's continued ability to generate substantial cash flow from operations due to its high operating margins, its significant levels of liquidity, and its prominent market position as the second largest U.S. tobacco company. The ratings further consider RAI's shareholder friendly high dividend payout ratio - currently at 75%. The company's losses in market share due to volume declines greater than industry average driven by outsize losses in non-growth brands are somewhat counterbalanced by the company's operational diversification attributable to its growing smokeless tobacco division Conwood. The company's ratings are lower than companies with similar credit profiles largely due to industry factors including continued and potentially accelerating volume declines and ongoing, albeit reduced, litigation risk.
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