Cigarette maker Lorillard Inc. said Wednesday its net income fell 10 percent in the first quarter as higher prices couldn’t offset a decline in the number of cigarettes sold.
The nation’s third-biggest tobacco company also announced that it has acquired electronic cigarette maker Blu Ecigs for $135 million, part of an industrywide push to diversify beyond the traditional cigarette business.
Lorillard, based in Greensboro, N.C., earned $223 million, or $1.70 per share, for the period ended March 31, down from $248 million, or $1.71 per share, a year ago.
A 10-percent drop in the number of outstanding shares helped buoy the per-share results for the recent quarter. Adjusted earnings were $1.74 per share.
Lorillard said the number of cigarettes it sold fell about 3 percent to 9.44 billion cigarettes. Newport, its biggest brand, fell 4 percent, while low-priced Maverick cigarettes rose about 10 percent. The company estimates that the industry as a whole sold about 4 percent fewer cigarettes during the quarter.
High unemployment and rising cigarette prices and taxes have caused many smokers to smoke less and trade down to cheaper brands during the recession in a bid to save money. Lorillard’s Maverick and Reynolds American Inc.’s Pall Mall brands have been among the beneficiaries.
Reynolds American, the nation’s second-biggest tobacco company and maker of Camel, Pall Mall and Natural American Spirit brand cigarettes, said Tuesday its first-quarter profit fell 29 percent as restructuring charges and a 5 percent decline in the number of cigarettes sold more than offset the effect of higher prices and productivity improvements. Altria Group Inc., owner of the nation’s largest tobacco company, Marlboro maker Philip Morris USA, is set to report Thursday.
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