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AOI planning ‘comprehensive global restructuring’

| February 10, 2015

In announcing yesterday its third quarter results to the end of December, Alliance One International’s CEO and president, Pieter Sikkel, said that the company was planning a comprehensive global restructuring program to position it better for the future.

The restructuring program would start during the fourth quarter and be completed over18 months.

‘As part of the plan we will look to further improve efficiencies in our operations around the world, continue to reduce our cost structure and optimize our global footprint,’ said Sikkel. ‘Improvements to our global footprint will include rationalizing certain markets that are not meeting performance metrics and do not represent strong future opportunities, while maximizing core markets where investments have been made over the past four years.

‘We are starting to see crop production volumes decrease in line with manufacturers’ requirements for global crops that should better balance supply with demand in the future. We will continue to monitor industry conditions that have impacted some of our customers’ volumes, as we execute on plans to make our operations more efficient, provide additional value-added services and reduce sourcing complexity…’

During the third quarter, AOI’s total sales and other operating revenues decreased by 25.3 percent to $488.9 million, primarily due to a 21.9 percent decrease in full service volumes.

Reduced volumes were said to have been due mainly to the delayed timing of shipments from Africa and North America, the deconsolidation of a Brazilian subsidiary following completion of a joint venture in March 2014, less favorable weather conditions in some sourcing markets and the impact of tobacco oversupply in the global market.

‘As a result of the oversupply, prices paid to tobacco suppliers in Brazil and Africa were lower this year, which reduced our average sale prices and tobacco costs on a per kilo basis,’ AOI said in a note posted on its website. ‘Also reducing average sale prices and tobacco costs per kilo was the impact of product and customer mix in Asia and Africa.

‘Processing revenue and cost of services increases were mainly related to a larger US flue cured crop this year that led to increased customer requirements.

‘Primarily the result of lower volumes, gross profit decreased 16.8 percent to $69.7 million.

‘As a result of customer and product mix in Africa and Asia, as well as lower conversion costs in North America due to the larger US flue cured crop this year, our gross profit as a percentage of sales improved from 12.8 percent to 14.3 percent.

Imperial to issue interim statement

| February 10, 2015

UK-based Imperial Tobacco is due to issue an Interim Management Statement on February 12.

RAI to webcast Cameron conference remarks

| February 10, 2015

Reynolds American Inc. is due to host a webcast of remarks made by president and CEO, Susan M. Cameron, at the Consumer Analyst Group of New York Conference starting about 17.30 Eastern Time on February 17.

The webcast will be available on a listen-only basis at www.reynoldsamerican.com, where registration is now open.

The presentation slides and a replay of the presentation will be made available on the same site.

BAT rolls out Dunhill Pocket Pack for price-sensitive consumers

| February 9, 2015

British American Tobacco Korea plans to launch Dunhill Pocket Pack, a limited edition, 14-cigarette pack that costs only krw3,000 ($2.75).

Although the pack is smaller — most packs have 20 cigarettes — the seemingly inexpensive price might be an appealing selling point  in South Korea, where many smokers have decided to quit or cut back due to the government-led price hikes that took effect at the beginning of the year.

How would plain packs legislation fare under TTIP?

| February 9, 2015

An Irish member of the European Parliament has sought to widen the standardized-packaging debate by placing it against the background of trade agreements currently being negotiated.

In a written question to the European Commission, MEP Nessa Childers asked whether the Commission considered non-discriminatory standardized packaging legislation, such as that applicable to cigarette packaging, to be a form of acquisition of intellectual property; or whether any claims to intellectual property rights might arise as a consequence of such legislation under present trade agreements or agreements the Commission had a current mandate to negotiate.

Although Childers did not mention specific trade agreements, it seems likely that she had in mind at least the Trans-Atlantic Trade and Investment Partnership that is being negotiated between the EU and the US against a background of considerable public opposition.

Negotiators have come under pressure from the public over the previously highly-secret nature of the negotiations that many believe would cede even more power to multinational corporations and undermine democracy.

Tobacco Promotion Board under fire in India

| February 9, 2015

A group of tobacco control activists and supporters staged a demonstration in Chennai, India, on Saturday demanding the closure of the ‘Tobacco Promotion Board’, according to a story in the Times of India.

Members of the Tamil Nadu People’s Forum for Tobacco Control said that while the health ministry was working on improving the country’s tobacco control law by making amendments to the Cigarette and Other Tobacco Products Act, it failed to see the destructive nature of the tobacco board, which worked for tobacco promotion.

Several doctors, social workers and lawyers were said to have taken part in the demonstration.

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