RICHMOND, Virginia — Newport maker Lorillard Inc.'s third-quarter profit jumped 12 percent as higher cigarette prices helped offset a decline in the number of cigarettes it sold.
The nation's No. 3 tobacco company, which is being acquired by competitor Reynolds American Inc., also said Thursday sales of its market-leading Blu electronic cigarettes dropped nearly 40 percent as it faces increased competition from Reynolds and Altria Group Inc., which have both been expanding their own e-cigarette brands nationally.
Despite the drop in sales, Lorillard, which bought Blu in 2012 for $135 million, said the brand continued to hold a nearly 30 percent share of the U.S. retail market.
The tobacco industry is focusing on cigarette alternatives like e-cigarettes for future sales growth because the decline in cigarette smoking is expected to continue. E-cigarettes heat a liquid nicotine solution which then creates a vapor that users inhale. The market reached nearly $2 billion in sales last year.
Last year, Lorillard bought a U.K.-based electronic cigarette maker for $49 million to expand Blu internationally.
As with its second-quarter results, the company did not host a conference call with investors regarding its earnings as it awaits its $25 billion deal with Reynolds to close. As part of the deal, Lorillard is selling Blu to the U.K.'s Imperial Tobacco and Reynolds plans to focus on its Vuse e-cigarette brand.
The Greensboro, North Carolina-based company said its net income rose to $289 million, or 80 cents per share, from $258 million, or 69 cents per share, a year ago. Adjusted earnings were 90 cents per share, matching Wall Street expectations.
Revenue excluding excise taxes rose 1 percent to $1.32 billion in the period. Analysts expected $1.33 billion, according to Zacks Investment Research.
Lorillard said cigarette shipments fell about 2 percent during the quarter. Newport shipments fell 1.4 percent while many of its other brands like Kent and True fell by double digits.
Newport garnered nearly 37 percent of the retail menthol market, which is becoming a bigger part of the business even as people smoke fewer cigarettes every year.
Michael Felberbaum can be reached at http://www.twitter.com/MLFelberbaum.