Alliance reports increased tobacco sales

Alliance One International’s sales and other operating revenues during the year to the end of March, at $2,243.8 million, were increased by 4.3 per cent on those of the previous year.

Tobacco sales were up by $94.1 million, primarily due to higher green costs caused by smaller crops in African countries and Brazil in respect of the fiscal 2013 crop.

At the same time, processing and other revenues decreased 1.1 per cent to $95.1 million due to a smaller crop in Brazil.

Gross profit decreased by 0.9 per cent to $285.2 million and gross profit as a percentage of sales decreased from 13.4 per cent to 12.7 per cent mainly due to higher per-kg processing costs incurred because of the smaller African crops – higher costs that were not fully passed on to the customer.

Gross profit and core operating results were impacted, too, by $14.3 million of foreign exchange hedge expenses, which compared with a $6.0 million gain last year.

Commenting on the results, Pieter Sikkel, CEO and president, said the company was encouraged by its sales improvements this year.

However, he added, there remained significant opportunities to improve the company’s performance and there were further objectives to meet as part of its reaching its goals.

“Strategic investment remains a primary focus and this year we deployed $39.9 million to further improve factory efficiencies and enhance our supply chain,” he said. “Investment in farmer agronomy programs, which support secure compliant sustainable supply as embraced by our customers, continues to be a key component of our plans.

“Total demand for tobacco, while shifting, is stable and supply remains tight in Burley and higher quality flavor tobaccos.

“Our balance sheet is well positioned with inventories at year-end of $903.9 million and uncommitted inventory well within our stated range of $50-$150 million…”