Day after its major rival Philip Morris, the second-largest tobacco maker across the nation Reynolds American revealed its first quarter profits report. The company registered an $82 million growth in the revenues, regardless of hefty cigarette taxes, reduction in cigarette sales and growing competition in the U.S. tobacco market.

Susan Ivey, Reynolds’s top executive declared that the company’s major market segments – cigarettes and smokeless tobacco – showed an impressive performance, recording growths in both market share and net incomes, while smokeless tobacco made a much higher progress than it was forecasted by the experts.

According to the report, overall sales added 3.4 percent to end up with approximately $2 billion.

Reynolds net revenue constituted $325 million, an 11-percent-increase from the same period in 2009, excluding settlement payments and other charges.

The double-digit rise in the profits in comparison to the same period last year – when the company had considerable trademark-infringement charges — pushed its share price to a record-high $56.23 this week. However, it ended with $55.77, 36 cents up.

Reynolds officials have claimed that the success of the company is reasoned by its flexibility, which is clearly seen in the marketing success of Pall Mall which was revived by the company as the discount cigarette brand over the recession.

Despite Camel is still a flagship major brand for Reynolds American and America’s third top-selling cigarette brand behind Marlboro and Newport, it market share fell from 7.6 percent down to 7.1 percent over the last 12 months.

In contrast, Pall Mall, which rose to the fourth place in the list of the most popular brands across the nation, propelled from 2.9 percent up 6.5 percent in the past 12 months. Together, Pall Mall and Camel make up half of the company’s cigarette sales volume.

Experts praised the wise marketing strategy Reynolds applied to Pall Mall, a brand that was almost forgotten by the smokers several years ago.

July Tong, Goldman Sachs analyst, said the progress of Pall Mall is so outstanding that it is hard to believe in the conditions of constantly shrinking cigarette market. She added that Pall Mall showed a 134 percent growth in sales volume over the last 12 months, which exceeded her forecast of 80 percent. According to Reynolds report, the company shipped 4.4 billion Pall Mall cigarettes.

As regards the smokeless tobacco segment, Reynolds’ key brand Grizzly dropped 0.7 percent in the market share to end up with 24 percent, though shipment volumes rose 11.7 percent to 72.6 million cans.

Grizzly’s loss of market share is reasoned by the aggressive pricing strategy the primary rival, Philip Morris USA has been applying to its major snuff brands Copenhagen and Skoal over the past 12 months. The strategy worked well for the Marlboro Maker, as Copenhagen regained the leading position in this category, with 25.6 percent market share, whereas Scoal consolidated its third position with 23.1 percent.

According to Reynolds CEO, the company has initiated the consolidation of its subsidiaries Reynolds Tobacco and American Snuff Co in one company. The move is to be completed by October.