December 09, 2015

Lorillard’s Role in the Tobacco Industry

The tobacco industry proceeds to be pressurized, with the majority of cigarette makers declaring not so positive outcomes. Even so, Lorillard revealed quite strong final results in its latest quarter. Regardless of whether Lorillard will show to be the dark horse of the tobacco market or will fail to the force surrounding the industry is still to be seen. So, let us take a look at the company.

Lorillard experienced an excellent 3Q. The company shared strong profits per share of $0.83, surpassing industry estimates of $0.81. The revenue proved a boost of 15.3% from the similar period of last year. The maker also claimed a 10% year over year boost in net sales which remained at $1.8 billion. The boost in the company's earnings was assigned to bigger sales volume and greater average selling prices.

Cigarette profit increased by approximately 7.1% to about $1.76 billion in contrast to $1.67 billion registered in the previous year. For instance, the year over year boost in wholesale cigarette volume constituted 3.5%, which is quite impressive as there is a lot of pressure on the cigarette industry. The retail market share of the company advanced by 0.5 percentage points. This happened mostly because of solid benefits in the company's key brands, such as: Newport and Kent. Newport's market share improved by 0.5 percentage points to 12.5%, while Newport  share leaped 0.7 percentage points to 40%.

Just lately, Lorillard obtained British based e-cigarette company for around $49 million. This purchase is of really great significance as it supplies Lorillard with a top e-cigarette brand in the United Kingdom. Not so long, the administration of Lorillard reported a $1 billion share buyback program. In the course of this quarter, the company repurchased about 5.7 million shares, which value $249 million. Later on, the company will further buy back shares worth $542 million within the given program. This reveals that administration considers that the company's stock is underestimated at the moment.

Despite the fact that the cigarette industry is dealing with a huge pressure, Lorillard proceeds to function properly. More importantly, solid profit increase is not basically supported by higher prices in addition to larger sales volume. Lorillard is repurchasing its shares, which is still one more favorable hint for traders.

By Clark Moore, Staff Writer
Copyright © 2015 All rights reserved.

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