Good year ahead

Universal Corporation said yesterday that it had performed strongly during the first quarter of what it predicted would be a good year.
In reporting the company’s first quarter results to the end June, chairman, president, and CEO George C. Freeman, III said the company had benefited from higher carryover crop sales in several origins, particularly in its North America segment, where sales volumes in the fourth quarter of fiscal year 2018 were hampered by shipping delays from reduced transportation availability in the US. ‘We are also continuing to see robust demand for both wrapper style tobaccos and related value-added processing services. We have increased our offerings to meet demand for natural wrappers in both the United States and Europe and continue to be a leading wrapper tobacco supplier.’
Freeman said that crop purchases were progressing as expected, with purchasing effectively completed in Brazil and well underway in Africa. ‘We are not seeing any significant supply disruptions thus far this year,’ he said. ‘Burley production volumes have recovered in Africa, and crop sizes there for both flue-cured and Burley tobaccos are coming in somewhat higher than previous estimates.
‘Although it is still early in our fiscal year, we are pleased with our results to date and continue to expect that our volumes will be above those achieved last fiscal year. We are also focused on our enhanced capital allocation strategy that reflects the strength of our balance sheet and demonstrates our commitment to sustainable shareholder value creation. As announced in conjunction with our 36 percent dividend increase in May 2018, our strategy has four key priorities: strengthening and investing for growth in our core tobacco business; increasing our strong dividend; exploring growth opportunities in adjacent industries that would utilize our assets and capabilities; and returning excess capital to our shareholders. In line with this strategy, we are positioning our company for ongoing success as we continue to identify areas where we can provide additional value and expand the services we provide customers in our core tobacco business.’
Universal reported net income of $13.2 million, or $0.52 per diluted share, for the first quarter of fiscal year 2019. ‘Those results were up $9.6 million compared with net income of $3.6 million, or $0.14 per diluted share, for the first quarter of fiscal year 2018,’ the company reported. ‘The first quarter of fiscal year 2019 included a non-recurring tax benefit from the reversal of a previously recorded foreign dividend withholding tax liability that reduced income taxes and increased net income by $6.9 million, or $0.27 per diluted share.
‘Operating income of $8.4 million for the quarter ended June 30, 2018, improved $2.0 million, or 31 percent, compared to operating income of $6.4 million for the quarter ended June 30, 2017. Similarly, segment operating income was $8.9 million for the first quarter of fiscal year 2019, up $3.0 million compared to the same period last fiscal year, mainly as a result of earnings improvements in the North America and Other Tobacco Operations segments, partially offset by earnings declines in the Other Regions segment. Revenues of $379.7 million for the quarter ended June 30, 2018, increased by $95.1 million, or 33 percent, on higher total volumes and processing revenues and a more favorable product mix.’