Lorillard Volumes Hit by Tax Increase in First Quarter

Source from:  Tobacco Reporter 04/29/2009

Lorillard's wholesale shipments for the first quarter of 2009, at 7.909 billion, were down by 7.6 per cent on those of the first quarter of 2008. At the same time, its domestic shipments were down by 8.2 per cent, and its domestic shipments of Newport were down by 10.6 per cent. But Lorillard says that Newport's retail market share increased by 0.2 share points to 10.1 per cent. Lorillard estimates that total industry shipments in the US were down by 10.4 per cent having been hit by negative tax-driven trade purchasing patterns ahead of the $0.62 increase in the federal excise tax on cigarettes from $0.39 to $1.01 a pack on April 1. The excise tax was imposed on inventory held as of March 31; so many wholesalers and retailers depleted their inventory levels as of that date. Lorillard increased its wholesale selling prices by $0.71 per pack to cover the increase in the federal excise tax and 'other costs' on March 6. Meanwhile, the company's net sales, at $917 million during the first quarter of 2009, were down by 0.4 per cent on those of the first quarter of 2008, $921 million. But gross profit, at $385 million, was up by 5.2 per cent from $366 million; operating income increased by 10.5 per cent to $294 million; and net income was up by 5.7 per cent to $184 million, or $1.09 per share. "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," said Martin Orlowsky, chairman, president and CEO. "We remain focused on our core strategy of balancing profitability with Newport share growth, which has allowed us to maintain our leading position in the menthol category." Enditem