Cigarette maker Lorillard Inc. said Thursday that its net profit rose nearly 20 percent in the fourth quarter was more cigarettes sold at higher prices.
A third of the country’s largest tobacco company said it earned $ 310 million, or $ 2.32 per share, for the three months ended December 31, compared with $ 259 million, or $ 1.74 per share, a year ago. Per share figure has been increased by a smaller number of shares outstanding. Lorillard, based in Greensboro, North Carolina, said adjusted earnings, which exclude the benefit from the cost of tobacco-related settlement was $ 2.20 per share, beating analysts’ expectations of $ 1.94 per share.
Revenue excluding excise taxes rose by about 10 percent to $ 1.12 billion. Analysts polled by FactSet expected revenue of $ 1.09 billion.
Lorillard has been bucking trends in the industry more broadly cigarette volumes declined, CEO Murray Kessler said in a conference call with investors.
Shares rose $ 7.81, or 6.9 percent, to $ 121.17 in morning trading Thursday.
The number of cigarettes sold Lorillard rose about 6 percent to 9.8 billion dollars. Newport, the largest brand, rose 4 percent, while the cheap cigarettes Maverick increased by 16 percent. Lorillard believes that the industry as a whole sold about 3 percent fewer cigarettes in the quarter.
High unemployment and rising prices and taxes on cigarettes have led many smokers to smoke less and sell for cheaper brands during the crisis in an effort to save money. Maverick Lorillard and Reynolds American Inc. “Pall Mall were among the beneficiaries.
Lorillard retail market grew 0.8 per quarter to 14 percent of the U.S. market. The share of the Newport menthol market grew slightly to 35.6 percent, while its main competitors have increased efforts to capture some of the growing market for menthol. The company said the promotion of free menthol Newport, Maverick brand growth and geographic expansion of the market share went to Newport.
Most tobacco companies have been raising prices and cutting costs to maintain profits in an economic downturn and declining demand cut into sales of cigarettes. Raising taxes, smoking bans, health and social stigma, and cigarettes made business tougher.
The company also said Thursday that it raised its quarterly dividend by 19 percent and buy back 3.3 million shares during the quarter.
For the full year, the company said it earned $ 1.11 billion, or $ 7.99 per share, in 2011, compared with $ 1.03 billion, or $ 6.78 per share, in 2010. Revenue excluding excise taxes increased about 10 percent to $4.45 billion.
On Wednesday, Reynolds American, which also makes Camel cigarettes brand, said its fourth-quarter profit rose 16 percent as higher prices and productivity helped offset the drop in cigarette sales. Volumes fell 7 percent to 10.5 billion cigarettes during the quarter.
Last week, rival Altria Group, owner of the country’s largest cigarette manufacturer, Philip Morris USA, said that its fourth-quarter profit fell about 9 percent on charges even higher prices and profits from its smokeless tobacco products have helped to strengthen their sales. His cigarette volumes were flat at 33.7 billion cigarettes, and the best-selling cigarette brand, Marlboro cigarette lost 0.7 points of market share. He has nearly 42 percent of the U.S. market.
Lorillard, the oldest continuously operating U.S. tobacco company, spun off from Loews Corporation in 2008.