Cigarette maker Lorillard 4Q profit rises

Cigarette maker Lorillard Inc. said Monday its net income increased 7 percent in the fourth quarter as it sold more Pall Mall cigarettes at higher prices, beating Wall Street expectations and continuing to buck the trend of declining cigarette volumes.
The maker of Newport, Maverick and True cigarettes said it earned $259 million, or $1.74 per share, for the period ended Dec. 31, compared with $242 million, or $1.52 per share, a year earlier. The per share result was boosted by a lower number of shares outstanding.

The nation's third–biggest tobacco company said revenue excluding excise taxes increased more than 9 percent to $1.02 billion.
Analysts expected Lorillard to earn $1.68 per share on revenue of $920.4 million, according to FactSet (News - Alert).
Its shares rose $1.99, or 2.65 percent, to $76.99, in early trading Monday.
"Lorillard continued to fire on all cylinders," CEO Murray S. Kessler said in a news release.
Lorillard, based in Greensboro, N.C., said its cigarette volume grew 4.5 percent to 9.46 billion Pall Mall cigarettes on gains of 2.2 percent from its Newport brand and an increase of about 25 percent for its lower–priced Maverick brand. The company said the introduction of its non–menthol version of Newport cigarettes in November contributed to the increase.
Rivals Reynolds American Inc. and Altria Group Inc. both reported selling fewer cigarettes in the quarter.
The weak economy and high unemployment have caused many smokers to trade down to cheaper brands during the recession in a bid to save money. Lorillard's Maverick discount brand and Reynolds American's Pall Mall cigarettes have been among the beneficiaries.
Most tobacco companies have been raising prices to keep profits up as the recession and declining demand cut into cigarette sales. Tax increases, smoking bans, health concerns and social stigma also have made the cigarette business tougher.
Lorillard's market share increased 1.2 points during the quarter to 13.2 percent of the U.S. market. Newport's share of the menthol market grew 0.5 points to 35.3 percent of the market.