Alliance reports 1Q net loss

Global tobacco markets are still tightening with undersupply developing in certain origins in respect of higher quality leaf, according to Pieter Sikkel, CEO and president of Alliance One International in reporting the company’s first quarter results to the end of June.

‘The strong US dollar, El Nino weather conditions, smaller crops in certain markets, as well as slowly correcting oversupply leaf trading conditions continue to be factors,’ he said.

‘In particular, El Nino driven increased rain-fall levels in Brazil this year related to the crop we are now buying and will sell later this fiscal year has reduced leaf weight.

‘At the same time the reduced crop size has caused pricing to suppliers to increase in Brazilian Real terms versus last year.’

Alliance reported that gross profit for the quarter had increased by 15.8 percent to $34.1 million on that of the first quarter of last year. Gross profit as a percentage of sales improved from 11 percent to 13.0 percent during the same period.

The improved profit was said to be the result of ‘increased volume, product mix, currency movements and the impact of efficiency improvement and cost cutting initiatives’.

The net loss for the quarter had increased to $31.5 million from a net loss of $26.0 million during the first quarter of the previous financial year.