TORONTO (Reuters) - Cigarette maker Rothmans ROC.TO said on Wednesday profit rose 22 percent in the third quarter, beating expectations, as it sold higher volumes of cheaper cigarettes.
But Canada’s No. 2 cigarette maker said price fluctuations and the contraband cigarette industry in Canada hit its bottom line.
Rothmans, which makes Craven A and Benson & Hedges brand cigarettes, earned C$29.4 million ($29.4 million), or 43 Canadian cents a share, in the quarter ended Dec 31, up from C$24.1 million, or 35 Canadian cents a share, in the same period a year earlier.
Revenue was C$174.2 million, up from C$156.2 million.
Two analysts polled by Reuters Estimates expected average earnings of 37 Canadian cents a share.
Sales at Rothmans Benson & Hedges Inc (RBH), which is a 60-percent owned unit, rose to C$170.8 million net of excise duty and taxes, from C$153.6 million. The unit shipped 2.7 billion cigarettes into the domestic market in the quarter, unchanged from the previous year.
Increased volumes of lower-priced cigarettes and higher prices across all categories boosted earnings, the company said, more than compensating for lower volumes in the premium cigarettes and fine cut products categories.
Reporting by Jonathan Spicer