Cigarette maker Lorillard Inc. (LO) delivered fourth quarter 2012 adjusted earnings of 79 cents per share, which exceeded the prior-year quarterly earnings of 73 cents by 8.2%. The company’s earnings also exceeded the Zacks Consensus Estimate of 76 cents per share.

The results benefited from top-line growth, a lower share count owing to the company’s buyback program, and favorable tax rates, partially offset by higher interest expenses.

Net sales in the reported quarter went up 5.3% year over year to $1.70 billion on the back of increased sales in both of its segments -- cigarettes and electronic cigarettes. Revenues surpassed the Zacks Consensus Estimate of $1.17 billion.

Segment Details

Cigarettes: Net sales of the cigarette segment increased 2.9% to $1.67 billion, driven by higher average cigarette selling prices and unit sales volume. Total wholesale cigarette volumes increased 0.3% to 10 billion units in the fourth quarter including Puerto Rico and U.S. shipments.

In the reported quarter, Lorillard's domestic retail market share climbed 0.2 share points to 14.2%, whereas domestic retail market share of the company’s flagship brand Newport jumped 0.2 share points to 11.9% in the fourth quarter, driven by increased promotional activity.

Adjusted gross profit increased 1.1% to $620 million, driven by higher sales offset by higher raw material costs. Adjusted operating profit increased $2 million to $507 million in the quarter.

Electronic Cigarettes: blu eCigs came into operations in this quarter, thus forming a new segment. The segment contributed $39 million to Lorillard's total net sales in the fourth quarter, almost three times the level of the prior quarter, driven by higher blu eCigs sales achieved from marketing and expanded retail distribution. blu eCigs domestic retail market share was over 30% of the electronic cigarettes market.

Gross profit was $16 million in the fourth quarter of 2012 while adjusted operating income totaled $7 million.

Full Year 2012 Results

In 2012, Lorillard’s adjusted earnings of $2.82 per share exceeded the prior-year quarterly earnings of $2.63 by 7.2% and the Zacks Consensus Estimate of $2.79 by 1.1%. The results benefited from top-line growth and increased retail market share of cigarettes.

Net sales in the year went up 2.4% year over year to $6.62 billion on the back of increased sales in both of its segments - cigarettes and electronic cigarettes.

Other Financial Update

Lorillard’s board declared a quarterly dividend hike of 6.5% on its shares to 55 cents per share. The dividend will be paid on Mar 11, 2013 to stockholders of record as of Mar 1, 2013. The company paid its last dividend of 52 cents in Dec, 2012.