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Lorillard Presented 2Q Profits

Published on August 6th, 2013 00:00

Cigarette manufacturer Lorillard, presented 2Q 2013 profits of 81 cents per share, which surpassed the previous quarter's revenue of 73 cents by about 10.0% and the industry experts estimates of 80 cents by just a penny.

The increasing market shares of the company's cigarette brands, limited cost control actions and good results in the company's electronic cigarette brand - turned out to be Lorillard's strong point in the second quarter of the present year. Net sales in the mentioned quarter have increased by 4.2% year over year reaching $1.8 billion on the back of robust sales of e-cigarettes. Profits were far away of the industry experts forecasts of $1.3 billion.

Net sales of the cigarette field raised by 1.4% to $1.74 billion because of larger average net cigarette selling prices mostly compensated by lower cigarette unit sales volume. Entire wholesale cigarette volumes dropped 1.6% to 10.44 units in the 2Q which include Puerto Rico and U.S. deliveries. In the claimed quarter, Lorillard's local retail market share dropped 0.6 share points reaching 14.9%, supported by solid improvements of the company's bestselling cigarette brands as Kent and Newport - whose local retail market share also raised to 12.6%, pushed by raised advertising activity in the key markets. Adjusted gross revenue raised 6.3% to $649 million in the quarter, due to larger average cigarette selling prices.

Lorillard corrected its present $500 million share buyback program and boosted its share repurchase limitation by an additional $500 million. Within the quarter, the company repurchased about 3.9 million shares under the $1 billion share buyback program released in March this year.

The Food and Drug Administration (FDA) is estimated to set a ban on menthol flavored cigarettes as it has mentioned that it is more appropriate for beginners due to its soft and fresh taste. Therefore, it will lead to an increase in smoking population in the country. This is predicted to impact Lorillard's sales adversely in the approaching quarters. On the whole, we are enthusiastic by the company's great share in the market with increasing popularity of its top brand Newport and value brand Kent.