Lorillard 1Q Profit Climbs As Cigarette Sales Rise

GREENSBORO, N.C. (AP) -- The maker of Newport, Maverick and True cigarettes saw its first-quarter profit climb 26 percent Monday as domestic product shipments and prices rose.

Lorillard Inc. also said higher federal excise taxes on smokes boosted revenue. Its stock rose 85 cents to $80.42 in premarket trading.

The nation's third-biggest cigarette maker's earnings grew to $232 million, or $1.50 per share, in the three months ended March 31. That's up from $184 million, or $1.09 a share, a year ago.

The earnings beat the $1.22 per-share profit estimate of analysts surveyed by Thomson Reuters. Those estimates generally exclude one-time items.

Revenue improved to $1.36 billion from $917 million as domestic wholesale shipments of discount brand Maverick grew 48.7 percent.

Many smokers traded down to cheaper brands during the recession in a bid to save money. Lorillard's Maverick brand and Reynolds American Inc.'s Pall Mall cigarettes have been among the beneficiaries.

Excluding $287 million related to the April 1, 2009, federal cigarette tax increase, revenue was $923 million on higher average prices, reduced promotions and increased net unit sales volume. Wall Street predicted $802.7 million.

"We have achieved these results despite challenging market conditions," Chairman, President and CEO Martin Orlowsky said in a statement.

Lorillard, based in Greensboro, N.C., said its total shipments grew 12.1 percent.

Domestic wholesale shipments increased 12.7 percent during the quarter, with domestic wholesale shipments of its Newport menthol brand up 9.8 percent.

Lorillard, which was spun off from Loews Corp. in June 2008, has been battling to keep its nearly 35 percent share of the relatively strong menthol market. Competitors Philip Morris USA, owned by Altria Group, and Reynolds American have ramped up efforts to market menthols.

Last week Reynolds American and Altria Group reported declines in cigarette sales. Reynolds and Altria on cigarette alternatives such as snuff and chewing tobacco for future sales growth as tax increases, smoking bans, health concerns and social stigma make the cigarette business more difficult.

Lorillard is the oldest continuously operating U.S. tobacco company. It was the last of the country's top tobacco companies to report its first-quarter results.

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