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GREENWICH, Conn. -- UST Inc. will concentrate on accelerating growth of the adult consumer base for its smokeless tobacco products in 2004, Chairman and CEO Vincent A. Gierer, Jr. told investors and analysts at the company's annual conference today. Getting the company's wine business back on the growth track is another goal for next year. UST Inc. is a holding company for its principal subsidiaries: U.S. Smokeless Tobacco Company and International Wine & Spirits Ltd.
"While price-value remains an issue in the marketplace and one which our plans are addressing, the real opportunity for growth remains attracting more adult consumers, particularly smokers, to the smokeless tobacco segment," he said. U.S. Smokeless Tobacco Company produces and markets moist smokeless tobacco products including Copenhagen, Skoal, Rooster, and Red Seal.
International Wine & Spirits Ltd. produces and markets premium wines sold nationally through the Chateau Ste. Michelle, Columbia Crest and Villa Mt. Eden wineries, as well as sparkling wine produced under the Domaine Ste. Michelle label. Other consumer products marketed by UST subsidiaries include Don Tomas, Astral and Helix premium cigars.
The company expects to invest an additional $24 million in efforts to accelerate growth in the smokeless tobacco category in 2004 by increasing investment in product innovation and programs to reach out to new adult consumers, according to a release.
"While our short-term earnings growth rate will be negatively impacted by approximately 3 percent due to the increased brand-building investment, it is still expected to result in record sales and earnings in 2004, and accelerated growth in 2005 and beyond," Gierer noted.
In 2004, the company anticipates increasing diluted earnings per share in the range of 2 percent to 5 percent above 2003. In 2005, the growth rate is expected to accelerate to 7 percent to 10 percent due to increased operating profit and lower interest expense as a result of debt repayment.
For 2003, the company is projected to generate an operating profit of approximately $900 million on revenues of $1.7 billion. The company remains on track to deliver diluted earnings per share of $2.93 to $2.95.
"We remain focused on increasing shareholder value over the long-term," Gierer said. "And I believe our plans for 2004 and beyond do just that."