RICHMOND, Va. - Tobacco company Lorillard Inc. said Monday that its second-quarter profit climbed 32 percent to top Wall Street's expectations as it increased prices, sold more cigarettes and increased market share for its Newport menthol brand.

The Greensboro, N.C.-based company earned $286 million, or $1.71 per share, for the period ended June 30, up from $217 million, or $1.25 per share, a year earlier.

Sales surged 42 percent to $1.52 billion from $1.07 billion on a significant rise in federal excise taxes. Excluding excise taxes, Lorillard's sales increased 16.6 percent compared with the year-ago period.

Analysts surveyed by Thomson Reuters, whose estimates typically exclude one-time items, forecast profit of $1.43 per share on revenue of $969.2 million.

Volumes had dropped industrywide during the first quarter as retailers and wholesalers cut their orders ahead of a one-time federal tax on their inventory. As a 62-cent-per-pack retail sales tax went into effect April 1, tobacco sellers had to pay a "floor" tax of 62 cents per pack on whatever they had on hand that day.

In the second quarter, tobacco sellers worked to restock their supplies.

Lorillard, whose other brands include Kent, True, Maverick, Old Gold and Max, said its cigarette volumes increased 2.1 percent compared with the year-ago period, while they estimate total industry volumes decreased about 4.1 percent during the period. Shipments of Newport decreased 1.2 percent, while the value-priced Maverick brand increased 67.6 percent

The company, which spun off from Loews Corp. in June 2008, says Newport's domestic retail market share rose 0.44 percentage points to 10.38 percent compared with the year-ago period.

"These results clearly reflect the continuing success of our strategy of balancing profitability and nurturing Newport's market share. Our second-quarter volumes were, to a degree, positively impacted by the adjustments in our wholesale customers' inventory levels following the federal excise tax increase," Chairman, President and CEO Martin Orlowsky said in a statement.

Lorillard's largest competitors - Altria Group Inc. and Reynolds American Inc., which reported earnings last week - also beat Wall Street estimates for their second-quarter results.

Altria Group Inc., owner of the nation's biggest cigarette maker, Philip Morris USA, maker of Marlboros, said its profit rose 9 percent as it cut costs and integrated a recently acquired smokeless tobacco maker. Revenue grew 33 percent to $6.72 billion from $5.05 billion largely on higher prices that included the federal tax hike.

Reynolds American Inc. - the second-biggest cigarette seller in the U.S., with brands such as Camel and Pall Mall - reported Thursday that its second-quarter profit climbed 4 percent because it raised prices and cut costs as sales volumes slipped and the tax hike took hold. Reynolds also beat forecasts.

Lorillard, which is the oldest continuously operating tobacco company in the U.S., said its results were also affected by fewer shares outstanding in the current quarter, which was the result of two buybacks in August 2008 and May 2009. On Monday, it announced an additional repurchase program of up to $750 million of its stock.

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AP Business Writer Michelle Chapman in New York contributed to this report.

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