Lorillard Profit Tops Estimate

(RTTNews) - Lorillard Inc (LO) on Friday reported a better-than-expected increase in first-quarter profit, driven by higher for cigarettes, including its flagship brand Newport, partly offset by weak demand for electronic cigarettes.

CEO Murray Kessler said increased unit volumes, robust pricing realization and cost controls in its cigarettes segment drove the results.

Lorillard, which is being acquired by Reynolds, said it benefited from a 6.4 percent rise in sales of cigarettes in the quarter.

Total wholesale unit volume, including Puerto Rico and U.S. Possessions, for Newport, increased 3.9 percent in the quarter. Domestic wholesale cigarette unit volume for Newport, which excludes Puerto Rico and U.S. Possessions, also increased 3.9 percent.

Domestic wholesale shipments for Maverick, the company's leading discount brand, slid 1.1 percent.

Meanwhile, its sales of electronic cigarettes plunged 45 percent from last year, hurt by increased competition.

The company reported first-quarter net earnings of $275 million or $0.76 per share compared with $271 million or $0.74 per share last year.

Excluding items, adjusted earnings for the quarter were $0.82 per share compared with $0.69 per share a year ago.

Analysts polled by Thomson Reuters estimated earnings of $0.77 per share for the quarter. Analysts' estimates typically exclude special items.

Revenues for the quarter rose 4.8 percent to $1.67 billion from $1.59 billion last year.

Analysts estimated revenues of $1.18 billion for the quarter.

Reynolds American agreed in mid-July 2014 to acquire Lorillard and its popular Newport menthol brand in a cash and stock deal valued at $27.4 billion. Shareholders of both companies, Reynolds American and Lorillard, approved the merger transaction on January 28. Lorillard expects the deal to close in the first half of 2015.

Additionally, Lorillard said that in April, the company paid, or will pay, $1.13 billion under the State Settlement Agreements, primarily based on 2014 volume.

Included in the payment is $93 million deposited in an interest-bearing escrow account in accordance with procedures established in the MSA pending resolution of a claim by the company and the other original participating Mmnufacturers that they are entitled to reduce their MSA payments based on a loss of market share to non-participating manufacturers.

LO is trading at $70.54, down $0.01 or 0.01%, on a volume of 1.8 million shares on the NYSE.