Lorillard Outperforms Market in First Quarter

Source from:  Tobacco Reporter 04/28/2010

Lorillard's domestic cigarette volumes during the first three months of this year, at 8.702 billion, were up by 12.7 per cent on those of the first three months of 2009. Comparing the same periods, total US domestic volumes were down by 2.4 per cent. Lorillard's volumes in Puerto Rico and US possessions were down by 12.7 per cent to 0.160 billion but, overall, volumes were up by 12.1 per cent to 8.863 billion. Full price brand volumes increased by 9.5 per cent to 7.640 billion because of a 9.8 per cent increase in sales of Newport to 7.509 billion. Sales of Kent were down by 6.8 per cent, sales of True were down by 4.0 per cent and sales of Max were down by 5.4 per cent. Price/value brand volumes increased by 42.4 per cent to 1.062 billion, with sales of Maverick up 48.7 per cent to 0.956 billion and sales of Old Gold up 3.1 per cent to 0.105 billion. Lorillard's share of the domestic market during the first three months of this year, at 12.61 per cent, was up by 1.17 percentage points. Newport's share was up by 0.75 of a percentage point to 10.90 per cent, and Lorillard's share of the domestic menthol market was up by 1.10 percentage points to 29.90 per cent. Net sales during the first three months of this year, at $1.360 billion, were up from $917 million during the first three months of 2009, partly because this year's results included a significant increase in federal excise taxes. Net sales excluding excise taxes during the first three months of 2010, at $923 million, were up by 20.3 per cent on those of the first three months of last year. Operating income was up by 29.9 per cent to $382 million and earnings per diluted share increased by 37.6 per cent to $1.50. "We are delighted to report a solid first quarter in which revenue, excluding excise tax, increased by 20 per cent, operating income increased by 30 per cent, and Lorillard's market share grew," said Martin Orlowsky, chairman, president and CEO. "We have achieved these results despite challenging market conditions, which is testament to our strong brands and continual focus on optimizing profitability and execution. "However, we would caution that, because of the significant disruptions our industry sustained last year combined with the effects of increases this year in wholesale inventories at certain of our customers, making comparisons to 2009 on a quarterly basis, particularly the first and second quarters, may lead to inappropriate conclusions and expectations about unit volume trends. "Longer term trends will be better judged by comparing the first half of 2010 to the first half of 2009. "We are encouraged that the underlying fundamentals of our business remain strong, but we would not expect the same sequential improvement over last year in our second fiscal quarter. "We continue to remain focused on our long term strategic objective of balancing Newport's market share performance and profitability and creating shareholder value." Enditem