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Optimistic Reynolds raises forecast on earnings 

Raising an earnings forecast while dealing with a decline in cigarette shipments and higher excise taxes on tobacco products may appear ambitious for Reynolds American Inc.

But Reynolds management said yesterday that it considers increasing its full-year projections to a range of $4.60 to $4.70 a share -- from $4.40 to $4.60 -- as a sign of confidence in its strategies and its Camel, Pall Mall and Grizzly brands.

It is the second consecutive quarter that Reynolds has upped the forecast, which excludes any trademark-impairment charges, but includes a 40-cent charge for increased pension expenses.

Reynolds also reported a profit of $362 million in the third quarter, up 72 percent from a year ago. The net-income surge, however, is skewed in part because the company took a combined $264 million in trademark-impairment and restructuring charges in the third quarter of 2008.

"This year has been marked by unprecedented increases in excise taxes on tobacco products, an extremely weak economy, and intense competitive activity," said Susan Ivey, the chairwoman, president and chief executive of Reynolds.

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