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RICHMOND, Va. (AP) — Cigarette maker Lorillard Inc. said today that its net income grew nearly 20 percent in the fourth quarter as it sold more cigarettes at higher prices.

The nation's third-biggest tobacco company said it earned $310 million, or $2.32 per share, for the three-month period ended Dec. 31, up from $259 million, or $1.74 per share, a year ago. The per-share figure was boosted by a lower number of shares outstanding.

Lorillard, based in Greensboro, said adjusted earnings that exclude a benefit from expenses related to a tobacco settlement were $2.20 per share, beating analyst expectations of $1.94 per share.

Revenue excluding excises taxes rose about 10 percent to $1.12 billion. Analysts polled by FactSet expected revenue of $1.09 billion.

Lorillard was bucking industry trends as broader cigarette volumes declined, CEO Murray Kessler said in a conference call with investors.

Shares rose $7.81, or 6.9 percent, to $121.17 in morning trading Thursday.

The number of cigarettes Lorillard sold rose about 6 percent to 9.8 billion. Newport, its biggest brand, rose 4 percent, while low-priced Maverick cigarettes rose 16 percent. Lorillard estimates that the industry as a whole sold about 3 percent fewer cigarettes during the quarter.

High unemployment and rising cigarette prices and taxes have caused many smokers to smoke less and trade down to cheaper brands during the recession in a bid to save money. Lorillard's Maverick and Reynolds American Inc.'s Pall Mall have been among the beneficiaries.

Lorillard's retail market share increased 0.8 points during the quarter to 14 percent of the U.S. market. Newport's share of the menthol market grew slightly to 35.6 percent, while its top competitors have ramped up efforts to grab some of the growing menthol market. The company said promotion of Newport non-menthol, the Maverick brand's growth and Newport's geographic expansion drove market share gains.

Most tobacco companies have been raising prices and cutting costs to keep profits up as the recession and declining demand cut into cigarette sales. Tax increases, smoking bans, health concerns and social stigma also have made the cigarette business tougher.

The company also said Thursday that it lifted its quarterly dividend by 19 percent and repurchased 3.3 million shares during the quarter.

For the full year, the company said it earned $1.11 billion, or $7.99 per share, in 2011 compared with $1.03 billion, or $6.78 per share, in 2010. Revenue excluding excise taxes increased about 10 percent to $4.45 billion.

On Wednesday, Reynolds American, which also makes Camel brand cigarettes, said its fourth-quarter profit rose 16 percent as higher prices and productivity gains helped offset declining cigarette sales. Volumes fell 7 percent to 10.5 billion cigarettes during the quarter.

Last week, rival Altria Group Inc., owner of the nation's biggest cigarette maker, Philip Morris USA, said its fourth-quarter profit fell about 9 percent on charges even as higher prices and gains from its smokeless tobacco products helped bolster its sales. Its cigarette volumes were flat at 33.7 billion cigarettes and its top-selling Marlboro brand lost 0.7 points of market share. It has nearly 42 percent of the U.S. market.

Lorillard, the oldest continuously operating U.S. tobacco company, spun off from Loews Corp. in 2008.