PEP PepsiCo Inc

By Tripp Mickle 

Reynolds American Inc. tapped Debra Crew, a former U.S. Army captain and PepsiCo Inc. executive who has helped boost the tobacco company's revenue since 2014, to become its new chief executive officer when Susan Cameron retires next year.

Ms. Cameron, 57, who was lured out of retirement by Reynolds in May 2014 to complete its $25 billion takeover of Lorillard Inc., said the move fulfills one of two mandates she was given by Reynolds's board after rejoining the company.

In addition to finding and grooming a replacement, Ms. Cameron was pressed to successfully integrate Lorillard after the takeover. That project was completed last month, about three months ahead of schedule.

Ms. Crew, who has served as president of the R.J. Reynolds Tobacco Co. subsidiary since 2014, played a critical role in the integration process, helping ignite growth of Lorillard's Newport brand, Ms. Cameron said.

"As part of this succession plan, [Ms. Crew] had to demonstrate she could do it in our industry and that she could lead this organization," Ms. Cameron said. "She has done that brilliantly."

Newport has increased its market share to 13.9% from 13.4% since June 2015, adding an estimated $200 million in quarterly incremental revenue for Reynolds, according to estimates by Wells Fargo.

Ms. Crew, 45, joined Reynolds after more than a decade's work across consumer packaged goods companies like Mars, Inc., Nestle SA and Kraft Foods Inc. She spent four years at PepsiCo rising from president of the soft drink and snack food company's Western Europe region to president of North America nutrition.

Ms. Cameron said the mix of Ms. Crew's expertise from the consumer packaged goods industry along with the tobacco expertise of longtime Reynolds executives like Chief Financial Officer Andrew Gilchrist would create a balanced leadership team that could effectively steer the company forward.

Ms. Crew takes over Reynolds at a time when the tobacco industry continues to struggle with declining cigarette volumes and slowing sales of e-cigarettes. The company said Wednesday it now expects U.S. cigarette volumes to decline 2.5% this year, down from an earlier estimate of a 2% downturn and more in line with historic declines of 3% to 4% annually.

In the most recent quarter, Reynolds said its cigarette volumes declined 1.5% to 22 billion from 22.3 billion a year ago as a 0.9% increase in Newport volumes failed to offset a 3.8% decline in volumes of Camel and Pall Mall.

The company reported a 47% decline in sales to $54 million from its "all other" division, which includes Vuse e-cigarettes.

Reynolds posted earnings of $861 million compared with $657 million a year ago, falling short of analysts' expectations. The company's stock fell 2.1% to $46.29 on Wednesday.

Ms. Crew said she plans to continue Ms. Cameron's efforts to expand Reynolds's tobacco portfolio, so it can compete for tobacco consumers who increasingly shift between cigarettes, smokeless tobacco and e-cigarette products. She said the company would provide an update soon on its strategy for "heat-not-burn" tobacco products, which are more similar to conventional cigarettes than e-cigs.

"Consumers continue to say they're interested in other choices outside cigarettes," Ms. Crew said. "We have options for those consumers and that's what makes us an exciting company."

--Mike Esterl and Joshua Jamerson contributed to this article.

Write to Tripp Mickle at Tripp.Mickle@wsj.com

(END) Dow Jones Newswires

October 19, 2016 17:30 ET (21:30 GMT)

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