Tag Archives: Lorillard
Major rivals likely to follow PM USA steps shortly
Philip Morris USA, the leading cigarette maker in the USA, owned by Altria Group, is set to complete a six cent price increase per pack of all of its cigarette brands, the second time the tobacco giant has raised its price list this year, reported Dow Jones.
The leading tobacco companies state the new regulations oblige them to place federal anti-smoking warnings more prominently than their branding on packs.
Leading tobacconists request a judge to stop new health warning labels on cigarette packs, which comprise shocking pictures of dead lungs and other diseases, since they unfairly promote taking off a legal product from the market and will cost millions to make.
“It is the first time in the United States history that manufacturers of legal products were obliged to use the packaging of these products as advertising of governmental campaign against these products, and calling adult customers to shun them,” the plaintiffs wrote in the note to the lawsuit submitted to federal court located in Washington.
A researcher from the U.S. Food and Drug Administration has discovered that smokers of menthol cigarettes aged 50 and over are less likely to pass away from lung cancer in comparison to those who smoke regular-flavored cigarettes, said a report published in the Winston-Salem Journal.
Brian Rostron, the scientist at the Center for Tobacco Products run by the FDA, compared data of 6,074 adult smokers between 1987 and 2006, with 1,417 being menthol smokers among them.
The lower likeability of premature death from lung tumor was discovered in all age and sex groups, as well as between black and white smokers.
“These results share the expectations that any relation between lung cancer and smoking of menthol cigarettes would be the most in the age when smokers have accumulated more years of smoking,” Prof. Rostron mentioned in a study published in the Nicotine & Tobacco Research Journal.
The latest report could be used as yet another evidence in the heated public-health discussions over menthol-flavored cigarettes that have been the only segment of American cigarette market to post continuous growth, according to the Winston-Salem Journal report.
The Food and Drug Administration started an independent review of scientific base after its Tobacco Products Advisory Panel issued a report recommending to prohibit mentholated cigarettes.
Philip Morris USA, Reynolds American and Lorillard are set to increase prices on their cigarette brands.
After Altria, the parent company of Philip Morris announced its cigarette price increase two weeks ago, its main rivals, Reynolds American and Lorillard admitted to follow the trend, approving five-cent price hike.
David Howard, senior communications manager at Reynolds American, said that the price hike would affect the company’s flagship brands, Pall Mall and Camel, and the support brands, including Winston, Kool, Salem and others. The price increase took into force last week.
He mentioned that the latest price change is a list-price rise intended to the cigarette-maker wholesale customers. Howard admitted that the company does not comment on retail prices, as they are set by the wholesalers.
Cigarette manufacturer Lorillard Inc.’s second-quarter net profit increased more than 10% as it sold Newport and Maverick cigarette brands at higher prices.
The third largest tobacco company cautioned that its third-quarter cigarette volumes will be affected because wholesalers stocked more than usual last year, and that could damage its earnings.
Lorillard gives significant attention to promotion of its brands, most of all on it currently launched non-menthol version of Newport.
The manufacturer didn’t give any guidance for this particular quarter.
Its shares dropped $5, or 4.4 %, ending trading at $107.29.
Investment analyst Vivien Azer declared that the company’s shares were under considerable pressure due to concerns about increase slowing down in the second half of the year, but the sell-out is “overdone.”
Lorillard spokesman stated that company’s net profit increased to $291 million, or $2.05 per share, for the period till June 30, up from $263 million, or $1.73 per share, a year earlier. The per-share figure was lifted due to lower number of outstanding shares.
The volume of cigarettes Lorillard sold increased about 10% to approximately 10.8 billion cigarettes on profits of 9.6 % from its Newport brand and nearly 21 % for its lower-priced Maverick brand, while it expected a 1.3 % decrease for the whole industry.
According to the company’s representative their non-menthol Newport cigarettes, launched in November, presented the bulk of the increase in Newport shipments during the quarter, but it also underlined that the price of promoting it affected its profit.
Competitors Reynolds American Inc. and Altria Group Inc. both declared selling fewer tobacco products in the same quarter.
Increased unemployment and growing cigarette prices and taxes have led many smokers to switch to lower-priced brands during the recession trying to save money. Lorillard’s Maverick and Reynolds American’s Pall Mall have been among the beneficiaries.
The majority of tobacco enterprises have been increasing prices and dropping costs in order to maintain profits up, as the recession and reducing demand affected cigarette sales. Tax increases and smoking bans have made cigarettes industry stricter.
Lorillard’s retail market share raised 1.4 points within the quarter to 14.2 % of the U.S. market. Newport’s share of the menthol cigarettes was firm at 36.6 %, while its main competitors have increased efforts to confer some of the raising menthol market.
The company’s gross revenue dropped to 35.4 % due to promotional costs for Newport non-menthol.
Lorillard it is the last one of the country’s largest tobacco companies to present second-quarter results.
The first was Altria Group, holding company of Marlboro producer Philip Morris, which declared that, while cigarette sales dropped, the prices were increasing. The top-brand Marlboro also lost its market share.
A Massachusetts jury has decided that the Lorillard Tobacco Co. attempted to attract African-American teenagers to smoking by giving out free cigarettes. The jury awarded $71 million compensation to son and the estate of a female smoker who died of lung cancer.
The Suffolk Superior Court jury read out its ruling last week after hearing months of testimony.
Mr. Willie Evans stated Lorillard, the oldest tobacco company in the nation, enticed his mother, Marie Evans, to trying cigarettes in the 1950s by providing her with free Newport cigarettes during a project held in at the Orchard Park residential complex in Boston, where she resided. He noted his mother was smoking during almost 40 years and died after continuous battle against lung cancer at age 54.
According to the verdict, Lorillard would have to pay late Marie Evans’ estate $50 million in damages and awarded another $21 million to her son.
During the lawsuit, an attorney for Greensboro-based Lorillard, and manufactures flagship Newport brand, and Kent, True, Maverick and other brands, declared that the company, like its major rivals, distributed free cigarette samples many years ago to adult smokers trying to attract them to its products. However, the lawyer insisted it did not distribute any samples to adolescents and said that the allegation that it intentionally passed out free cigarettes to African-American kids “disturbing.”
Lorillard attorney as well stated Evans decided to begin smoking and did not quit the habit even after a heart attack she had in 1985 when her doctors repeatedly asked her to get rid of smoking. The company’s spokesman declared they would appeal the ruling.
“Lorillard respectfully expresses disagreement with the ruling and negates the plaintiff’s allegation that it gave samples to adolescents or adults at Orchard Park in Boston in the 1960s,” Lorillard spokesperson Gregg Perry stated. “The plaintiff’s testimony based on 50-year-old memories was convincingly contradicted by several witnesses. Lorrilard is set to appeal this ruling and is confident the Massachusetts Court of Appeals would review that case.”
This lawsuit is the first of its kind in the United States to accuse a tobacco company of attracting African-American adolescents by giving out cigarette samples in urban neighborhoods, admitted Edward A. Sweda, Tobacco Products Liability Project attorney.
Sweda said this lawsuit could result in similar lawsuits across the nation by other people who were given free cigarettes in their childhood.
Marie Evans’ attorney stated she got her first cigarettes when she was 9 and first passed them to her older sisters or exchanged them for candy, but she started smoking when she was 13.
Jurors also were ale to hear Evan’s testimony through a videotaped recording she gave to her attorneys in 2002, shortly before her death. On the tape, she admitted free cigarettes had a great effect on her, because they were available and she needed no money to get them.
According to several experts Lorillard has become a takeover target for tobacco industry tycoon R.J. Reynolds due to the emerging popularity of its cigarette brands – Newport and Kent. It also has appeared to be a major object of interest since it is a less than expensive stock that might be traded up to 30% higher.
Lorillard Tobacco Company is listed in the Top 20 of the oldest US companies. It is also the oldest cigarette manufacturer in the United States. Lorillard is the third biggest American tobacco company behind Philip Morris and R. J. Reynolds. Although it produces a rather large variety of cigarette brands like Maverick, True, Old Gold, Kent, Satin, and others, the company is world-famous for its leading brand – Newport, which has been the best selling menthol cigarette during two years.
Lorillard Tobacco Company is a bright example of a one-brand company; hence its market value comprises more than $10B. Although it is smaller than main rivals, this company owns an absolutely astonishing net profit margin of over $1B and has no debts. Moreover, the revenues are supposed to reach a 7% raise this year. Despite the Americans tend to give up smoking, Lorillard earned almost 3% more last year in comparison with a 3% decline for the tobacco industry as a whole.
Lorillard best brand Newport makes a 7,8% share of the American cigarettes market, being the number two in the list of best selling cigarette brands behind Philip Morris’s Marlboro.
Many investors consider that Lorillard is heavily underestimated on Wall Street. It is also rumored that R. J. Reynolds has started private negotiations with Carolina Group, the owner of Lorillard, attempting to purchase Lorillard for a much more considerable price than its actual $62/ share. Should Reynolds succeed in their attempt, they would become the largest tobacco company in the world, leaving Imperial Tobacco and Philip Morris International behind them.
However, it is still unclear if a Reynolds/Lorillard merger would be approved by antitrust legislation. Hence, experts remind about the Miller/Coors combo that contributed to the birth of a monopoly at the beer market duopoly but managed to go through the antitrust review.
Peter Edelman, a BNP Paribas expert admitted that Lorillard is the simply the best tobacco company in the world. He stated that it should have an $80 share, since they are simply undervalued by the Wall Street.
According to several other analysts, if Reynolds succeeds in the purchase of Lorillard it would be the most outrageous deals from both financial and strategic points of view.
Yet, there is only one but enormous obstacle, namely the law introduced to the Congress. If the law would be endorsed, the Food and Drug Administration would obtain the right to regulate the cigarette industry. It could lead to imposing a ban on menthol cigarettes. However, this situation seems rather unbelievable since it has been scientifically proven that menthol-flavored cigarettes provide maximum the same health complications as regular-tasted cigarettes.