AOI volume stable

In the three months to the end of June, Alliance One International (AOI) sold about 61.2 million kg of tobacco, about the same amount as it had sold during the three months to the end of June 2016, even though South-American shipments were ‘noticeably reduced’ because there had been only ‘minimal carryover’ of the smaller, El Niño-affected 2016 crops.

In announcing AOI’s first-quarter results to the end of June, president and CEO Pieter Sikkel said revenue had improved by 6.1 percent or $15.9 million to $277.0 million on that of the quarter to the end of June 2016 due to a 4.8 percent increase in average sales price that was driven by a higher ratio of lamina/by-products sales.

“Additionally,” he said, “at quarter end, our uncommitted inventory reached a seven year low just inside the mid-point of our stated target range of $50.0 to $150.0 million.

“Due to selling mainly prior year crops during the quarter that were impacted by currency and smaller crops sizes last year, gross profit decreased $5.4 million to $28.6 million. Excluding the impact of currency movement in Other Regions, gross profit would have been consistent with the prior year.”

Looking ahead, Sikkel said fiscal year 2018 was progressing favorably and in line with expectations. Excluding Malawi, which had a much smaller crop this year, global market conditions were positive.

Weather patterns were good, supporting better growing conditions; so that, in key markets where AOI was currently buying, crop sizes had returned to more normal levels.

Later, Sikkel said that AOI’s customers were focused on enhancing global-supply-chain sustainability and driving positive change in nicotine consumption habits with reduced risk products.

“Alliance One is well positioned to continue to meet customer requirements for traditional products with directed agronomy investments in systems and people,” he said. “Such investments, as well as others, uniquely position our company as a key supplier for new products our customers are developing and we will continue to invest where appropriate returns should be achievable…”