Lorillard’s domestic-market wholesale cigarette shipments during the three months to the end of March, at 9,287 million, were down by 2.5 per cent on those of the first quarter of 2011.
Shipments of Newport were down by 4.0 per cent to 7,792 million, while shipments of Kent and True, Lorillard’s other full price brands, were down by 15.9 per cent to 42 million and by 15.4 per cent to 44 million respectively.
In total, full price brand shipments were down by 4.1 per cent to 7,879 million.
Shipments of price/value brands were increased by 7.7 per cent to 1,408 million, with shipments of Old Gold down 9.0 per cent to 121 million, and those of Maverick up by 9.6 per cent to 1,287 million.
Meanwhile, Lorillard’s shipments to Puerto Rico and US Possessions were down by 16.1 per cent to 154 million; so domestic and overseas shipments, taken together, were down by 2.7 per cent to 9,441 million
Lorillard’s share of the US domestic market increased by 0.4 of a percentage point to 14.5 per cent with Newport’s share up by 0.2 of a percentage point to 12.2 per cent.
The menthol cigarette share of the US market increased by 0.1 of a percentage point to 31.1 per cent and Lorillard’s share of the menthol segment increased by 1.0 percentage point to 40.0 per cent. Newport’s share of the menthol segment increased by 0.5 of a percentage point to 36.8 per cent.
“Lorillard’s fundamental performance remained strong in the first quarter, although it was masked by significant changes in wholesale inventory,” said Murray S. Kessler, chairman, CEO and president.
“At retail, which is unaffected by wholesale inventory, Lorillard once again achieved record high levels of market share in all key segments of the cigarette industry in which we compete.
“Based on strong fundamentals, that are expected to continue, we remain confident in our ability to deliver a double digit total shareholder return in 2012 and over the long term as measured by earnings per share growth and dividend yield.”
Lorillard’s net sales during the three months to the end of March, at $1,526 million, were down by 0.6 per cent on those of the first quarter of 2011, $1,535 million.
Reported operating income was down from $421 million to $392 million, and adjusted operating income was down from $421 million to $399 million.
Reported net income was down from $248 million to $223 million, and adjusted net income was down from $248 million to $229 million.
Reported diluted earnings per share were down from $1.71 to $1.70, while adjusted earnings per share were increased from $1.71 to $1.74.
On the same day that it reported its first quarter results, Lorillard announced that it had acquired all of the assets of blu ecigs, a US electronic cigarette company, for $135 million in cash.
‘The acquisition provides Lorillard with the leading brand, offering the best consumer experience and unique social networking features, in the rapidly growing e-cigarette category,’ Lorillard said in announcing the acquisition.
‘Blu ecigs is the best-selling e-cigarette brand, with the look and feel of traditional cigarettes – without the tobacco smoke, ash, or smell. Blu ecigs is the market leader in providing innovative technology for an improved consumer experience that enhances the enjoyment and social aspect of e-cigarettes. Blu ecigs will be a separate operating company of Lorillard and it is Lorillard’s intention to retain blu ecigs’ current management team and its headquarters in Charlotte, NC.’
Kessler said that blu ecigs represented the perfect adjacency for Lorillard to participate in the smokeless market, “in a Lorillard way”. “That is, e-cigarettes offer many of the benefits of other smokeless products but do so in a way that is familiar and enjoyed by current adult cigarette consumers.
“We believe that blu will benefit from Lorillard Tobacco Company’s regulatory experience and sales infrastructure which are needed for it, and the category, to reach its potential in a responsible manner.”