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Alliance volumes improved slightly

| June 6, 2014

Alliance One’s sales and other operating revenues during the year to the end of March, at $2,354.9 million, were up by 5 percent on those of the financial year that ended on March 31, 2013.

The tobacco sales revenue and tobacco cost increases were said by Alliance to be mainly the result of larger crop sizes, higher prices and shipments delayed from the prior fiscal year.

“Volumes improved slightly with increased levels of South American byproducts and larger crop sizes in Africa offset by the change in sales from the investee operation in Thailand and the timing of Asian shipments, said Alliance in announcing its results.

“Reduced customer processing volumes in Brazil as a result of increasing green prices required by farmers throughout the buying season, delay in purchasing and processing the current Brazilian crop and smaller weather-related crop sizes in the United States led to reduced processing revenues and cost of services.”

Gross profit fell by 15.8 percent to $240.0 million and gross profit as a percentage of sales decreased from 12.7 percent to 10.2 percent, mainly due to the impact of higher green costs in multiple origins that were not fully recovered from customers, reduced processing and unrecovered farmer advances primarily in Zambia.

“Partially offsetting increased costs were lower derivative losses in Brazil net of increased exchange losses due to appreciating currencies in Africa this year, when compared to last year,” said Alliance.

“Selling, general and administrative expenses decreased 8 percent to $134.1 million when compared to the prior year, driven by lower incentive compensation and amortization related to internally developed software as well as reduced professional fees driven by lower monitor costs that will no longer recur.”

Other income decreased by 12.1 percent to $18.2 million primarily due to the net effect of the gain recorded on the sale of a Turkish warehouse, gain on the closing of the joint venture in Brazil, other asset sale gains, various costs and reduced loss on sale of accounts receivable.

“In comparison, last year, other income was $20.7 million related mainly to a non-cash benefit of $24.1 million recorded for Brazilian excise taxes based on a court ruling and higher loss on sale of accounts receivable,” Alliance said.

Tobacco tax up and down in Philippines

| June 6, 2014

The Philippines’ government “lost” an estimated PHP15.6 billion in taxes last year due to the trade in illicit tobacco products, according to a story in The Philippine Star quoting a report by the U.K.-based Oxford Economics and the U.S.-based International Tax and Investment Center.

The report, commissioned by Philip Morris International, was designed to measure the consumption of illicit cigarettes—those products sold on the domestic market without the correct taxes having been paid on them—in the Philippines and its impact on revenue losses for the government.

“Because of illicit tobacco trade, the government is losing over PHP15 billion it should have been collecting from tobacco excise tax,” Adrian Cooper, chief executive officer at Oxford Economics, said in a briefing yesterday in Makati.

“While the administration can be pleased they have achieved a 114 percent increase in tobacco excise revenue in 2013 as a result of the new tax regime, one cannot ignore the tax foregone as a result of this very rapid growth in the illicit cigarette trade, with domestic illicit cigarettes making up the lion’s share of this.”

The report found that 19.1 billion illicit cigarettes were consumed in the country last year, almost three times the estimated 6.4 billion consumed in 2012.

Essentra expands its offering to include smokeless nicotine products service

| June 5, 2014
Essentra is offering the full package.

Essentra is offering the full package.

Essentra PLC is offering to supply to its customers tailor-made smokeless nicotine products based on Essentra “proofs of concept.”

“The e-cigarette market is growing extremely rapidly, and it is therefore essential that Essentra—not only as a trusted partner to the tobacco industry through its Filter Products and Packaging businesses, but more broadly as an innovator—identifies and responds to the evolving market trends which face our customers in a way that enables us to continue to add value to them,” said Malcolm Waugh, group commercial director.

“We believe that Essentra is well-positioned as a B2B supplier to assist its customers with their requirements in the growing non-tobacco space, and that our ‘proofs of concept’—which can then be tailored to meet individual customer requirements—demonstrate the broad range of solutions which the overall Essentra Group can deliver.”

In a press note, Essentra said that, following extensive research and development, it had developed a number of fully functional and packaged prototypes to showcase to customers. Mainly, these products, which included e-cigarettes, aimed to provide end users with the same smoking experience they would obtain from traditional cigarettes, though they included, too, nicotine-free products.

“… through its range of businesses, Essentra is ideally placed to offer a full-service proposition to customers,” the press note said. “Essentra Extrusion can provide the plastic for the barrel of the product, with the company’s Components business having the capacity either to manufacture or source ancillary components.

“In addition, Essentra Porous Technologies is able to supply the material for the transfer of nicotine (or other liquids or vapors) to the end user while, with its proven abilities in folding carton, tear tape, labels, leaflets and security features, Essentra’s Packaging business can provide an extensive range of solutions.

“Meanwhile, as a trusted partner to the tobacco industry, Essentra Filter Products will continue to make the most of its strong and long-standing customer relationships.”

The Scientific Services division also has played an important role in the new venture.

“With the backing of analytical results from its accredited Scientific Services testing laboratory, Essentra identified a lack of consistency in performance as an issue in the e-cigarette market,” the press note said.

“As a result, one of the company’s critical propositions to customers is that its e-cigarette solutions are not only innovative, but also reliable, and deliver the traditional cigarette equivalent stated on the pack.”

Smoking grounded at Moscow Airport

| June 5, 2014

A Moscow Region court has ruled that smoking areas at Sheremetyevo Airport should be closed, according to a Russian Legal Information Agency story quoting an announcement yesterday by the prosecutor general’s office (PGO).

The country’s anti-smoking law, the second part of which came into effect on June 1, bans smoking in many enclosed and open public places, including airports.

The PGO said that it had been established that there were 10 designated smoking areas in Terminals D and E of Sheremetyevo Airport in violation of the federal law that prohibited smoking at airports.

The Sheremetyevo management had been instructed to dismantle the smoking areas within a month of the court’s ruling.

In consuming 340 billion cigarettes in 2012, Russia was second only to China, but it is starting to crack down on tobacco use.

Alliance to webcast results today

| June 5, 2014

Alliance One International said yesterday that it would hold a conference call starting at 17.00 hours Eastern Time on June 5 to report its financial results for the fiscal year ended March 31.

The call will be available on the Alliance website,, where registration is required 15 minutes before the start of the call.

A replay of the call will be available by telephone from 20.00 hours on June 5 through 20.00 hours on June 10 on (888) 203-1112 from within the US or (719) 457-0820 from outside the US, using the access code 2918167.

Iggesund’s Swedish mill approaching ‘fossil-free’ and low-emissions vision

| June 4, 2014

Iggesund Paperboard believes that its Swedish mill is fast approaching the company’s demanding environmental goals.

For a while in mid-April, the Iggesund Mill was able to operate solely on bioenergy while also supplying almost all its own electricity needs, the company said in a press note sent out yesterday.

Another important aspect of the vision for the Iggesund Mill was that emissions to air and water should be so low that Iggesund was among the global leaders among comparable manufacturers.

And yet another goal was that a minimum of by-products would go to landfill.

“We’re getting close to the vision of a fossil-free mill that we’ve lived with and that has driven our investments for a long time,” mill director Olov Winblad von Walter was quoted as saying. “Our new recovery boiler, which came on line in spring 2012, is getting better and better as we fine tune it, and our increasing pulp production is also boosting our energy production.”

Iggesund Mill was one of the world’s integrated paperboard mills with the highest level of investment, the press note said. The mill’s biggest investment to date, €250 million, had seen the installation of a new recovery boiler, which had enabled the mill gradually to increase its annual pulp production from 350,000 tonnes to 420,000 tonnes.

“Our sulphate process for pulp production means that we separate out the cellulose fibres that comprise half the mass of a log,” Winblad von Walter said. “The other half consists of the wood’s binding agent, which is mostly an energy-rich substance called lignin. We burn this in the recovery boiler and it produces enough steam and electricity to cover more than 90 per cent of our energy needs.”

A nearly fossil-free energy supply was not the only benefit Iggesund’s new recovery boiler delivered. ‘After the boiler had been fine tuned, it turned out that particle emissions from the mill, which were already low, had been halved,’ the press note said. ‘Sulphur emissions, which contribute to the acidification of surrounding land, have also fallen by more than 80 per cent from what were already low levels.’

And it is not only in Sweden where energy sources have been improved. Just over a year ago, the energy source at Iggesund’s board mill in Workington, England, was changed from natural gas to biomass. ‘Achieving this required the investment of about €122 million in a new biofuel boiler,’ the press note said. ‘Today the mill operates solely on biofuel and in addition to covering its own energy needs it also supplies fossil-free electricity to the UK electricity grid.

“One of the goals driving our investments is long-term sustainability, and the investments in both Iggesund and Workington are the result of that approach,” said Staffan Jonsson, head of Group Technology at the Holmen Group, to which Iggesund belongs.

The installation of the Iggesund Mill’s recovery boiler was one of the basic requirements in the quest to operate the mill without using any fossil fuel.

The installation of the Iggesund Mill’s recovery boiler was one of the basic requirements in the quest to operate the mill without using any fossil fuel.

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