Broad leaf demand/supply in balance
With the lower leaf tobacco crop levels of 2016, Universal Corporation believes that the supply of flue-cured and Burley is largely in line with demand on a global basis.
“However, inventories held by our customers and the leaf quality and pricing of crops yet to come to market may influence near-term demand for leaf tobacco and the desirability of certain types and styles,” said chairman, president, and CEO, George C. Freeman, III, in announcing yesterday the company’s first quarter results to the end of June.
“It is still early in the season, but customer orders and indications to date remain consistent with our expectations.
“We currently anticipate that our volumes sold in fiscal year 2017 will be lower than those in the prior fiscal year mainly due to reduced Brazilian volumes, and that shipment timing will again be weighted to the second half of the fiscal year.
“We are continuing to carefully monitor crop purchases this season, and our uncommitted inventories remain within our normal range.”
Freeman put Universal’s reduced Brazilian purchasing and processing volumes in the first fiscal quarter down to the effects of El Nino weather patterns and the company’s decision to reduce its buying program there “due to escalating and unsustainable green leaf prices”.
“We expect decreased volumes from that origin to continue to affect our results throughout the fiscal year.
“Our global leaf production estimates indicate a return to historical crop levels in Brazil’s 2017 growing season, for which plantings are currently underway.”
Universal reported a net loss of $5.5 million, or $0.40 per diluted share, for the first quarter, which was broadly in line with the net loss of $5.9 million, or a $0.43 per diluted share, for the first quarter of fiscal year 2016. Results for the first fiscal quarter of 2016 included restructuring costs of $2.4 million ($1.6 million after-tax or $0.07 per diluted share).
An operating loss of $8.0 million for the quarter ended June 30, 2016, was reportedly down $2.7 million compared to that of the quarter ended June 30, 2015.