Lorillard reports 1Q profit increase

May 10th, 2011 11:50

The oldest cigarette company in the United States reported its 1Q net profit grew 7 percent, on increase in Newport and Maverick sales and higher prices on these brands.

The outstanding performance was reaches against an assessed 3.4 percent volume decline in the US cigarette market. When revealing its first quarter profit report, the third-biggest cigarette maker declared that the first three months time frame comprised one shipping day more than during the 1q of the previous year. The company adjusted the final figures, taking into account the extra day and insignificant changes in inventory tendencies, and concluded that domestic volume has grown by an approximate 8.3 percent.

The Newport-maker’s full price brand shipping grew by 7.5 percent totaling 8,217 million.

The flagship Newport brand posted an 8-percent growth to 8,114 million, a rise where Newport Non-Menthol, introduced in November 2010, becoming the first key brand extension in more than ten years, was considered to have contributed significantly.

Nevertheless, within the company’s full-price basis, True volume declined by 16.6 percent to total 52 million and premium brand Kent volume went down by 21.1 percent reaching 50 million. Mid-value brand volume increased by 23.1 percent to achieve 1,307 million, with Maverick volume going up by 22.7 percent to 1,174 million and Old Gold volume growing by 26.0 percent to reach 133 million.

Taking into account shipment volumes to Puerto Rico and US Territories, Lorillard’s total volume increased by 9.5 percent totaling 9,708 million. The company reported its share of the nationwide retail market within the first three months of 2011, reached 14.1 per cent, growing by 1.5 percent, whereas Newport’s share reached 12.0 percent, going up by 1.1 points.

Newport Menthol’s share of the menthol category of the US cigarette market remained stable at 36.4 percent. The menthol category across the nation was estimated to have grown by 1.1 percent to reach 31.0 percent of the entire cigarette market. In the meantime, the company’s net sales in the first three months reached $1.535 billion, going up by 12.9 percent versus those reported in the first quarter last year.

Lorillard profit

The growth in net sales was reported to have contributed by the increase in sales volume and prices, partly compensated by higher expenses on promotions resulted from the launch of Newport Non-Menthol. Gross profit in the three months to April 2011, totaled $543 million, accounting for 35.4 percent of net sales, while, in the first quarter of 2010, gross profit represented 35.1 percent of net sales, at $478 million.

The rise in gross profit was reported to result from the growth in net sales, partly compensated by increase in expenses concerning the State Settlement Agreement payments, and Food and Drug Administration fees. “In the first three months, Lorillard once again demonstrated outstanding performance, showing the best financial results across the industry,” declared Murray S. Kessler, the company’s CHIEF Executive Officer, chairman and president.

The continuous increase is contributed by the flagship Newport brand which demonstrates persistent growth, in spite of external challenges.

Latest News