With net income up Universal looks forward to improved market conditions

Universal Corporation’s net income for the first half of fiscal year 2013, which ended on September 30, was $71.1 million, or $2.50 per diluted share: significantly higher than its net income during the first half of last year, $7.8 million, or $0.02 per diluted share.

The comparison of the current and prior year six-month periods is affected by several unusual items, which amount to net pre-tax charges of $3.7 million ($0.05 per diluted share) for the first six months of fiscal year 2013, and $49.3 million ($1.90 per diluted share) for the same period of last year.

Meanwhile, for the three months ended September 30, net income of $48.0 million, or $1.68 per diluted share, which included restructuring costs totaling $3.7 million ($0.05 per diluted share), compared with a net loss for the second quarter of last year of $8.0 million, or $0.51 per diluted share, which included unusual items amounting to a net pre-tax charge of $52.1 million ($1.93 per diluted share).

“Our results have been good for the first half of the fiscal year, but they were heavily influenced by the effects of shipment timing,” said chairman, president and CEO, George C. Freeman, III.

“We saw carryover sales from last year’s large African crops in this fiscal year’s first quarter and accelerated shipments fromSouth Americaand other origins in the second quarter.

“During the same period last fiscal year, shipments began later inBrazilandAfricadue to a slow start to the season caused by oversupplied markets.

“Although production of flue-cured and Burley tobacco outside ofChinais down, our leaf volumes shipped during the first six months are comparable to last year’s levels. Our uncommitted stocks have also been reduced to very low levels, and we do not anticipate shipment volumes in the second half of the fiscal year to be equivalent to those of the previous fiscal year.

“Beyond that caveat, I am pleased with the recovery in leaf tobacco and with our company’s performance in these transitional markets.

“Looking forward, we expect market conditions to improve, and we are anticipating larger crops in several key origins where production has not met demand this year.

“Our continued successful management of our cash flow and uncommitted inventories has allowed us to maintain our strong balance sheet and financial flexibility, which we view as a competitive advantage. It also enables us to continue rewarding our shareholders, as we have done with our 42nd consecutive annual dividend increase announced today.”