By Ben Fox Rubin
Lorillard Inc. (LO) said fourth-quarter earnings declined 5.2%,
as the cigarette maker posted higher product costs, though volumes
of its top brand and electronic cigarette sales improved.
Lorillard reported a profit of $293 million, down from $309
million a year earlier. Per-share earnings were flat at 80 cents,
due to fewer shares outstanding in the latest quarter. Excluding
amortization expenses and other items, per-share earnings rose to
82 cents from 79 cents. Sales grew 2.3% to $1.74 billion, though
product costs were also up 2.3%.
Analysts surveyed by Thomson Reuters had projected a profit of
86 cents a share and sales of $1.31 billion.
The company, which sells Newport cigarettes, reported total
wholesale shipments fell 1.6%. However, volume for the Newport
brand, which represents a bulk of its sales, rose 0.4%.
Tobacco companies have been challenged by declining demand for
traditional cigarettes over recent years, especially as a weak
economy pressures consumers' disposable income. Lorillard, based in
Greensboro, N.C., has entered the e-cigarette market more
aggressively than larger U.S. tobacco rivals Altria Group Inc. (MO)
and Reynolds American Inc. (RAI), purchasing the Blu e-cigarettes
company in 2012 for $135 million and making it into the industry
leader.
Sales of e-cigarettes, which turn nicotine-laced liquid into
vapor, are growing quickly as traditional cigarettes face more
public-smoking bans and are viewed as more harmful due to
combustion. The company's fourth-quarter electronic cigarette sales
grew 38% to $54 million from a year earlier, while traditional
cigarette sales rose 1.4% to $1.69 billion.
Write to Ben Fox Rubin at ben.rubin@wsj.com
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