Alliance Reports Lean First Quarter But Outlook Better

Source from:  Tobacco Reporter 08/08/2011

Alliance One International's net income for the first quarter ended June 30, at $1.3 million, or $0.02 per basic share, was down by about 90 per cent on its net income of $13.8 million, or $0.16 per basic share, during the first quarter to the end of June 2010. Commenting on the results, the company's CEO, Mark W. Kehaya, said they were consistent with Alliance's internal estimates, which took into account the global oversupply situation and industry changes that reduced sales to two customers following their implementation of partial vertical integration strategies. "We believe that we have now largely replaced these full service volumes, but the new sales are more heavily weighted to the back half of the fiscal year, which as anticipated, impacted the first quarter compared to last year. "Based on current orders for the full year, we should achieve increased volumes, revenue and improved profitability from operations versus last year." Looking ahead, Kehaya said that farmer plantings in the southern hemisphere were beginning and, while these were still early days, it appeared that certain markets that overproduced recent crops might reduce plantings this year because of the lower prices paid for green tobacco. "Combined with higher prices for competing food and grain crops today and anticipated for next year, the oversupply trend may be entering a corrective phase," he added. "We continue to focus on meeting our customers' orders in a disciplined manner." Meanwhile, sales and other operating revenues decreased by 26.4 per cent to $361.6 million and gross profit as a percentage of sales decreased from 16.3 per cent to 15.6 per cent. Enditem