Leaf Merchant Posts Loss

Source from:  newsobserver.com John Murawski, Staff Writer 06/28/2006

Most of Alliance One's $447 million loss from write-off In its first annual financial report since moving to the Triangle, Alliance One International posted a loss of $447.4 million for the fiscal year ended March 31. One of the world's largest leaf tobacco merchants, Alliance One is emerging from a challenging year as it tries to renegotiate better prices with global tobacco manufacturers. The company's tobacco markets have been disrupted by drought, political instability, weak currency rates and competition. "We believe the most difficult period is behind us," said Brian J. Harker, chairman and chief executive. After the year's loss of $5.51 per share, the company is projecting a per share gain of 18 cents to 25 cents in the current fiscal year. Most of last year's huge loss came from a noncash accounting write-off. In all, Alliance One took a $338 million noncash loss for goodwill, restructuring and impairment charges. In one of its biggest markets, Brazil, the company took a hit from a prolonged drought that reduced crop quality and volume. The Brazilian tobacco market struggled through another drought this season, though not as severe as last year's. Alliance One does business in 43 countries. Excluding the noncash losses, Alliance One lost $31.1 million in the fiscal year. Sales were $2.1 billion. Alliance One was born of a merger and expects to save $115 million in annual operating costs from layoffs and other cost savings. Layoffs worldwide have cost Alliance One $55 million in severance and other expenses in the past fiscal year. The company began operating in Cary in November. "Despite significant market challenges, our merger integration is on track," Harker said. The company did not provide combined sales and income figures for past years. Alliance One employs about 3,400 people worldwide, including 350 in North Carolina, 47 of them in Cary. The company is saddled with $1.1 billion in debt. Additionally, Alliance One lost an international price-fixing case and was fined $29 million by the European Commission last year. The company has paid all fines and is appealing. The company reported its results after the close of regular stock market trading Friday afternoon. Its stock closed at $4.34 Friday, down 4 cents. The shares have fallen 29 percent in the past year. Enditem