Cigarette maker Lorillard 1Q profit falls 17 pct

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RICHMOND, Va. (AP) — Tobacco company Lorillard Inc.'s first-quarter profit fell more than 17 percent as its costs rose, it sold fewer cigarettes and its year-ago results benefited lower expenses from a longstanding legal settlement.

Most tobacco companies have been raising prices and cutting costs to keep profits up as demand for traditional cigarettes declines. Tax increases, smoking bans, health concerns and social stigma also have made the cigarette business tougher. The industry also is diversifying beyond the traditional cigarette business with electronic cigarettes.

The nation's third-biggest tobacco company said Thursday cigarette shipments fell about 3 percent to 8.96 billion cigarettes.

Volumes of Newport, Lorillard's biggest brand, fell 1.5 percent. The brand's U.S. retail market share grew to 13 percent and its share of the menthol was 37.5 percent.

Lorillard said its e-cigarette sales fell 10.5 percent to $51 million compared with a year ago when the company significantly expanded its distribution of its Blu e-cig brand, which was acquired in 2012. It also bought U.K.-based electronic cigarette maker Skycig last year to expand its global presence in the fast-growing business. Lorillard said Blu has about 45 percent market share.

The company, based in Greensboro, N.C., earned $271 million, or 74 cents per share, for the period ended March 31. That's down from $328 million, or 86 cents per share, a year ago.

Excluding one-time items, earnings were 69 cents per share, 3 cents lower than analysts expected.

Revenue excluding excises taxes rose 2 percent to $1.15 billion. Analysts polled by FactSet expected $1.19 billion.

Lorillard Inc., the oldest continuously operating U.S. tobacco company, was spun off from Loews Corp. in 2008.

In afternoon trading, shares added 41 cents to $54.06.

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Michael Felberbaum can be reached at http://www.twitter.com/MLFelberbaum

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