Tobacco wars hit RJR Nabisco

NEW YORK - RJR Nabisco, the large American foods and tobacco group, emerged as the biggest loser to date in the cigarette price wars being waged in the United States, reporting tobacco sales off 20 per cent in the last quarter, writes Larry Black.

RJR was forced to cut prices on its best-selling Winston and Camel brands last spring when the world's leading tobacco company, Philip Morris, slashed the price of its Marlboro cigarettes.

Others, notably BAT's Brown & Williamson subsidiary, have followed suit. But the second- quarter results from RJR - reporting a decline in group operating earnings from 25 to 20 cents a share - suggest it has been the hardest hit by the discounting.

After one-off charges, RJR made dollars 77m, or six cents a share, compared with dollars 87m, or seven cents a share, during the same period a year ago.

The company said that extremely competitive domestic tobacco prices were to blame for the drop in profits. But it predicted that higher volumes will at least partly offset the tighter margins later in the year and produce strong earnings in 1994.