UPDATE 2-Lorillard profit beats expectations

* Q2 EPS $1.73 vs Wall St $1.61 view

* Shipments fall less steeply than rest of industry

* Shares up 1.4 pct
(Adds context, CEO comment, stock activity, byline)

By Emily Stephenson

CHICAGO, July 26 (BestGrowthStock) – Cigarette maker Lorillard Inc
(LO.N: ) reported a higher-than-expected quarterly profit as its
Newport brand increased domestic market share.

While shipments for Newport and other brands decreased from
a year earlier, the rest of the tobacco industry suffered worse
declines, Lorillard said. The company’s shares rose more than 1
percent.

“Lorillard outperformed the industry in each of the first
two quarters of this year and achieved record retail market
shares,” Chief Executive Officer Martin Orlowsky said in a
statement.

The industry previously expressed concern that a large
increase in the U.S. tax on tobacco last year, which companies
said skewed purchase patterns in 2009, would hurt shipments
this year.

Orlowsky said the industry also faced pressure from the
recession, expanding smoking restrictions and state taxes on
cigarettes.

Cigarette makers Philip Morris International Inc (PM.N: ),
its parent Altria Group Inc (MO.N: ) and Reynolds American Inc
(RAI.N: ) posted higher-than-expected profits last week and
raised 2010 forecasts. The companies said higher prices for
cigarettes helped offset declining demand.

Lorillard said second-quarter net income fell to $263
million, or $1.73 a share, from $286 million, or $1.71 a share,
a year earlier.

Analysts on average had expected earnings of $1.61 a share,
according to Thomson Reuters I/B/E/S.

The company said domestic wholesale shipments fell 0.6
percent, compared with an industrywide decrease of 7.1
percent.

Lorillard said its Newport brand increased domestic market
share to 10.9 percent from 10.4 percent.

The company’s shares were up 1.4 percent at $77.40 in early
New York Stock Exchange trading.

Stock Market Research

(Reporting by Emily Stephenson; Editing by Michele Gershberg
and Lisa Von Ahn)

UPDATE 2-Lorillard profit beats expectations