By Angela Chen
Lorillard Inc. (LO), currently awaiting its merger with Reynolds
American Inc., said Friday sales grew 4.8% in the March quarter on
higher volume.
Results beat Wall Street expectations, sending shares up less
than 1% in midday trading. However, the company reported declining
revenue in its electronic cigarette segment, as other cigarette
producers create similar products.
Lorillard is in the process of completing a merger with Reynolds
American in a complicated, four-company deal valued at about $25
billion. The combined company would control about a third of the
U.S. cigarette market, which would make it No. 2 behind rival
Altria Group Inc.
Both companies said the merger, which comes as cigarette volumes
have been falling across the industry, is on track to close
mid-year. Bucking the trend, the maker of Newport cigarettes
reported a 3.1% overall increase in wholesale cigarette volume in
the latest quarter. Lorillard's total market share increased 0.3
share points to 15.5%.
Lorillard's Blu, among the leading e-cigarette brands, is marked
to be divested in the Reynolds deal. For the period ended in March,
sales of electronic cigarettes were $28 million, down from $51
million a year earlier. The decrease was due mostly to competition
from other companies.
Overall, the company posted earnings of $275 million, or 76
cents a share, up from $271 million, or 74 cents a share, a year
earlier.
Excluding restructuring costs and other items, earnings were 82
cents a share, up from 69 cents a share in the prior-year
period.
Sales increased to $1.67 billion from $1.59 billion.
Analysts had projected 77 cents a share in earnings and $1.18
billion in revenue.
Reynolds American on Friday said its revenue grew 6.3% in the
March quarter due to higher pricing that offset declining
volumes.
Write to Angela Chen at angela.chen@wsj.com
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