Mixed Fortunes for Universal Corp in First Half

Source from:  Tobacco Reporter 11/09/2009

Universal Corp reported improved flue-cured and Burley volumes in Asia and South America during the first six months of fiscal 2010, which ended on September 30, though shipment delays in some areas were said to have limited that improvement. African shipments were substantially lower, however, because the current crop is due to be shipped later and first quarter shipments of old crop were reduced. Volumes were lower during the second quarter, meanwhile, primarily due to late shipments in Africa and accelerated shipments from Brazil and Europe in the first quarter of fiscal year 2010. Volumes associated with Universal's Other Tobacco Operations were said to be higher in the quarter but flat over the six months. George C. Freeman III, chairman, president, and CEO, said net income for the first six months at $96.3 million or $3.23 per diluted share was increased on that of the first six months of last year: $62.9 million or $2.02 per diluted share. Mostly, this improvement was down to a $17 million decline in currency-related costs, better margins, and a favorable tax rate. Revenues for the six months of about $1.3 billion were flat, Freeman said, as lower volumes due to later shipments and reduced old crop tobacco sales were offset by a better mix of business and higher prices in some areas. For the second quarter, net income, at $52.5 million or $1.77 per diluted share, was up from $41.8 million or $1.38 per diluted share during the second quarter of fiscal year 2009. The increase was primarily due to a $25 million decline in currency-related costs and the favorable tax rate. Revenues for the quarter of about $648 million were down significantly as some shipments were either accelerated into the first quarter or delayed until later in the year. "We are very pleased with our performance so far this year," Freeman said. "All of our operations continue to perform well, benefitting from continued cost controls and global co-ordination. "We do not foresee an oversupply of flue-cured tobacco in the coming year. In fact, rains in Brazil during the season could reduce the crop there. Although African Burley crops were very large this year, they were smaller than we anticipated, and it appears that the supply has been absorbed by the market. "We would not expect to see any significant increase in worldwide dealer inventories for flue-cured and Burley tobacco. However, looking at the current worldwide situation, the US dollar has weakened in recent weeks, which could increase costs as we enter the next purchasing season." Enditem