Lorillard loses cigarette volume but gains share
Lorillard’s domestic wholesale cigarette shipment volume during the 12 months to the end of December, at 38,535,460,000, was down by 2.0 percent on that of 2013, 39,325,216,000.
Including shipments to Puerto Rico and US Possessions, shipments were down by 2.3 percent to 39,014,140,000.
Shipments of Newport cigarettes fell by 1.4 percent to 32,900,591,000, while shipments of full price brands taken together decreased by 1.5 percent to 33,175,733,000; with shipments of Kent down by 13.1 per cent to 131,670,000 and shipments of True down by 12.8 percent to 143,472,000.
Shipments of price/value brands decreased by 5.3 percent to 5,359,727,000, with shipments of Old Gold down by 9.4 percent to 395, 910,000 and shipments of Maverick down by 4.9 per cent to 4,963,817,000.
Lorillard’s market share during 2014, at 15.1 percent was up by 0.3 of a percentage point on that of 2013, with Newport’s share up by 0.3 of a percentage point to 12.9 per cent.
Menthol cigarettes last year held a 31.7 percent share of the US market, up by 0.3 of a percentage point from that of the previous year, and Lorillard held a 40.3 percent share of the total US menthol segment, up by 0.1 of a percentage point. Newport’s share of the US menthol segment was 37.1 per cent, up by 0.1 of a percentage point.
Meanwhile, during the three months to the end of December, Lorillard’s domestic cigarette shipments, at 9,646,722,000, were down by 1.0 percent on those of the three months to the end of December 2013, 9,748,031,000. Including Puerto Rico and US possessions, shipments were down by 0.9 percent to 9,762,102,000.
Newport’s shipments during the final quarter were down by 0.6 percent to 8,251,008,000, and total full price brand shipments were decreased by 0.7 percent to 8,317,404,000. Total price/value brand shipments were down by 3.4 percent to 1,329,318000.
Lorillard’s net sales during the 12 months to the end of December, at $6,990 million, were up by 0.6 per cent on those of the previous 12 months period.
Reported operating income was up by 2.6 percent to $2,108 million while adjusted operating income was up by 5.3 percent to $2,138 million.
Reported net income was up by 0.6 percent to $1,187 million while adjusted net income was up by 4.1 percent to $1,216 million.
Reported diluted earnings per share were up by 4.1 percent to $3.28 while adjusted diluted earnings per share were up by 7.7 percent to $3.36.
“Lorillard finished the year in impressive fashion, delivering strong fourth quarter financial and operating results, marked by continued robust cigarette pricing realization, the 12th consecutive year of market share gains and tight cost controls – resulting in 13 percent adjusted earnings per share growth in the quarter and almost eight percent in the full year,” said chairman, president and CEO Murray S. Kessler, in announcing the results.
“Once again, Lorillard shareholders were rewarded with another year of double-digit total shareholder returns as measured by EPS growth and the dividend yield. These results in 2014 are even more remarkable in the context of our continued investments in building the blu eCigs brand both domestically and internationally and without the benefit of share repurchases in the second half of 2014, which have been discontinued as a result of our pending acquisition.
“Overall, we are very pleased that the fundamentals of our cigarettes segment continue to lead the industry, owing to the ongoing market share gains from our flagship Newport brand, while at the same time our electronic cigarettes segment continues to be at the forefront of product innovation and consumer acceptance in the burgeoning e-cigarette category.
“It should also be noted that these solid results have been accomplished while we have been working diligently towards completing our previously announced combination with Reynolds American. Assuming the transaction is approved, it would deliver significant and immediate value to Lorillard shareholders, while also providing for meaningful upside opportunity for Lorillard shareholders through their approximate 15 percent ownership of the combined company.”