UPDATE 1-Reynolds earnings fall below expecations

* Q2 EPS $0.67 vs. Wall Street view $0.71

* Drop in cigarette volume steeper than Altria's

* Shares down 3.7 percent

CHICAGO, July 22 (Reuters) - Reynolds American Inc (RAI.N) posted a lower-than-expected quarterly profit on Friday as its cigarette shipments fell more sharply than those of top competitor Altria Group Inc (MO.N), and its shares fell nearly 4 percent.

Besides the decrease in cigarette volume, a charge from a smoking cessation program in Louisiana and costs for plant closings cut into profits.

The tobacco company said net income was $304 million, or 52 cents a share, in the second quarter, down from $341 million, or 58 cents a share, a year earlier.

Excluding one-time items, earnings were 67 cents a share, below the analysts' average estimate of 71 cents compiled by Thomson Reuters I/B/E/S.

Reynolds posted a 4.4 percent drop in shipment volume to 19.4 billion cigarettes.

In contrast, Marlboro maker Altria's cigarette shipments fell 0.7 percent, the company said on Wednesday.

Reynolds shares were down 3.7 percent at $37.09 in premarket trading on Friday. (Reporting by Eunju Lie; Editing by Lisa Von Ahn)