Lorillard 1Q profit up 5.7 percent
RICHMOND, Va. — Lorillard Inc., the maker of Newport cigarettes, said Monday its first-quarter profit rose 5.7 percent on higher prices and lower costs.
The earnings fell short of Wall Street estimates and its shares fell 42 cents to close at $62.18.
The Greensboro, N.C.-based company said its profit rose to $184 million, or $1.09 per share, in the three months ended March 31, up from $174 million, or $1 a share, a year ago.
Sales fell less than one percent to $917 million on lower volumes, which were partially offset by higher prices. The sales were down from $921 million a year ago.
The latest profit was below the $1.15 per share analysts surveyed by Thomson Reuters expected while sales topped the $865.4 million estimates. The earnings estimates typically exclude one-time items.
“We are pleased with our results for the quarter despite the extraordinary inventory adjustments that occurred related to the Federal Excise Tax increase and the impact of the current macroeconomic pressures,” Chief Executive Martin Orlowsky said in a news release.
Volume was constrained by tobacco retailers and wholesalers who cut their orders ahead of a one-time federal tax on their inventory. Tobacco sellers had to pay a “floor” tax of 62 cents per pack on whatever they had on hand before a 62-cent-per-pack retail sales tax went into effect April 1.
For the quarter, Lorillard said it saw a 7.6 percent decrease in its wholesale shipment volumes to 7.909 billion cigarettes, with declines of 10.6 percent on its Newport brand.
But the company said Newport’s retail market share increased 0.2 to 10.1 percent compared with the year-ago period.
Lorillard said it raised its wholesale prices 71 cents a pack in March to cover the increase in the federal excise tax and other costs.
Selling, general and administrative costs declined 9 percent to $91 million in the first quarter, compared with $100 million a year ago when the company incurred a $13 million charge related to the separation from Loews Corp. Lorillard said lower marketing costs were offset by continuing legal expenses.
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