February 6, 2008 / 12:12 PM / in 10 years

Rothmans profit rises 22 pct on cheaper cigarettes

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.

($1=$1.00 Canadian)

Reporting by Jonathan Spicer

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