Alliance Hit by Oversupply And Changing Buying Patterns

Source from:  Tobacco Reporter 02/09/2011

Alliance One International reported a net loss of $2.0 million, or $0.02 per basic share, for its third quarter to the end of December, compared to a net income of $47.3 million, or $0.53 per basic share, during the three months to the end of December 2009. For the nine months to the end of December, the company reported net income of $32.1 million, or $0.36 per basic share, compared to net income of $60.3 million, or $0.68 per basic share, for the nine months to the end of 2009. "Our quarter and nine month results were impacted by increasing oversupply in certain markets and changes in customer buying patterns, which reduced sales and margins…" said CEO, Mark W. Kehaya. "Oversupply has been building in certain markets the last nine months as a result of increasing prices paid to farmers during the last three years and generally good growing conditions globally. "Oversupply will likely increase this crop year during the back half of southern hemisphere purchasing, which will reduce green prices in some markets. "Looking to the 2012 crop, we believe that lower prices paid this year for the 2011 crop, combined with significant commodity inflation for competing crops, may cause many farmers to produce less tobacco reversing the oversupply trend. "We are committed to working closely with all of our customers, assisting them with planning for the future and helping to manage the dynamic industry environment. Our commitment is clearly seen in the Brazilian transactions completed during the quarter with PMI of certain asset sales in Rio Grande do Sul and the announced processing arrangement with JTI in our new facility in Santa Catarina beginning with this year's crop. Both transactions are exciting and strategically position AOI for the future." Enditem