Alliance's Income Falls Slightly in First Quarter

Source from:  Tobacco Reporter 08/06/2009

Alliance One International's reported net income for its first quarter ended June 30, at $14.5 million, was down by 5.2 per cent on that of the first quarter last year, $15.3 million. Net income per basic share, at $0.16, was down from $0.17. Sales and other operating revenues decreased by 10.6 per cent to $410.5 million primarily because of an 11.6 per cent fall in volumes, partially offset by an increase in average sales prices. Gross profit increased by 14.7 per cent to $88.0 million and gross profit as a percentage of sales increased from 16.7 per cent to 21.4 per cent. CEO, Robert E. Harrison, said sales for the quarter had declined year on year because of later southern hemisphere purchasing and processing driven by crop timings, while gross profit and operating income had improved. "Net income remained strong at $14.5 million with a modest $828,000 decline due to an increased tax provision as anticipated," he said. "As we look forward, flue cured tobacco remains in tighter global supply which continues to place upward pressure on green prices paid to farmers and in turn prices paid by our customers. "World supplies of Burley tobacco that appeared to be in greater supply at the beginning of this season, due to the larger Malawi crop, have tightened some as Malawi crop size estimates have declined. Our Burley purchases in various markets are selling through, while prices paid to farmers, and by our customers, are now increasing. "We primarily sell our products in US dollars and incur the majority of our costs in various local currencies where we buy and process tobacco. The US dollar has again begun to depreciate versus a number of currencies including the Brazilian Real, our largest foreign currency cost exposure, which has been volatile over the last twelve months. Further foreign currency appreciation is anticipated as the global economy continues recovery from recent economic lows and we are proactively managing related costs. Improving operating efficiencies and evolving agronomy programs focused on increasing crop yields should also help to partially offset cost pressures going forward." Enditem