Lorillard Inc.'s (LO) fourth-quarter profit rose a
better-than-expected 7% as the cigarette-maker claimed more market
share for its Newport menthol brand.
The results from third-largest U.S. cigarette maker follow
larger rivals Altria Group Inc. (MO) and Reynolds American Inc.
(RAI) both reporting improved earnings for the year-end period,
helped by higher margins as sales dipped.
The U.S. Food and Drug Administration has been probing the
health effects of menthol and is slated to issue a report in March.
The likelihood of the study leading to a menthol ban remains
unclear, as does the impact such an event would have on the
company, which recently launched a menthol-free version of its
flagship Newports.
Cigarette sales volume has been on the decline in the U.S., but
menthol cigarettes have generally done better.
Lorillard reported a profit of $259 million, or $1.74 a share,
up from $242 million, or $1.52 a share, a year earlier. The
increase included an 11-cent benefit from its share repurchase
program.
Net sales rose 7.8% to $1.49 billion and were up 9.4% excluding
excise taxes.
Analysts polled by Thomson Reuters most recently expected
earnings of $1.67 a share on $1 billion in sales, excluding excise
taxes.
Gross margin, excluding excise taxes, increased to 36.2% from
34.9% amid higher sales volume that offset the costs of state
settlement agreements and government fees.
Domestic shipments rose 4.6% and Newport shipments edged up
2.2%, as the brand's domestic market share moved up to 11.2% from
10.4%.
Shares closed at $75 Friday and were inactive premarket.
-By Matt Jarzemsky and Drew FitzGerald, Dow Jones Newswires;
212-416-2240; matthew.jarzemsky@dowjones.com