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SEEKING ALPHA, 4/26.04, 26 201
SEEKING alphA 4/26/2011 quESTIONS AND ANSWER
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April 27, 2011 Lorillard’s sales and share up sharply
Apr 27, 2011—Lorillard's wholesale domestic cigarette shipment volume during the first three months of this year, at 9,524 million, was up by 9.4 per cent on that of the first three months of 2010.
This performance was achieved against a background of an estimated 3.4 per cent fall in volume for the US domestic market as a whole.
In reporting its first quarter 2011 figures, Lorillard said that the three months period under review had included one more shipping day than had the first quarter of 2010. Adjusting for this additional day and for 'modest' changes in wholesale inventory patterns, Lorillard's domestic volume had increased by an estimated 8.3 per cent.
Lorillard's full price brand volume was up by 7.5 per cent to 8,217 million.
Newport volume was up 8.0 per cent to 8,114 million, an increase in which Newport Non-Menthol, launched in the final quarter of 2010 as the first major Newport extension in a decade, was said to have played a significant part.
Also within Lorillard's full-price stable, True volume was down by 16.6 per cent to 52 million and Kent volume was down by 21.1 per cent to 50 million.
Price/value brand volume was up by 23.1 per cent to 1,307 million, with Maverick volume up 22.7 per cent to 1,174 million and Old Gold volume up 26.0 per cent to 133 million.
Including shipments to Puerto Rico and US Possessions, Lorillard’s overall volume was up by 9.5 per cent to 9,708 million.
Lorillard's share of the US domestic retail market during the first three months of this year, at 14.1 per cent, was up by 1.5 percentage points, while Newport's share of the market, at 12.0 per cent, was up by 1.1 percentage points.
Newport Menthol's share of the US market's menthol segment was unchanged at 36.4 per cent. The menthol segment in the US was said to have increased by 1.1 percentage points to 31.0 per cent of the total market.
Meanwhile, Lorillard's net sales during the first quarter of this year, at $1.535 billion, were increased by 12.9 per cent, or $175 million, on those of the first quarter of 2010.
The increase in net sales was said to have resulted from higher unit sales volume and higher average prices, partially offset by higher sales promotion costs primarily driven by the introduction of Newport Non-Menthol.
Gross profit during the first quarter of 2011, at $543 million, represented 35.4 per cent of net sales, whereas, during the first quarter of last year, gross profit was $478 million, or 35.1 per cent of net sales.
The increase in gross profit was said to reflect an increase in net sales, partially offset by higher costs related to the State Settlement Agreements and the Federal Assessment for Tobacco Growers, and higher Food and Drug Administration user fees.
"In the first quarter, Lorillard once again delivered industry leading financial results on virtually every measure that matters," said Murray S. Kessler, chairman, president and CEO.
"It's a testament to our flagship Newport brand which continues to organically grow volume and market share, despite challenging external conditions."
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