Universal Corp. posted sales and other operating revenue of $1.08 billion for the first half of 2022, up 34 percent over that reported in the comparable 2021 period. Reported operating income increased 27 percent to $51.2 million. Sales and other operating revenues from the tobacco business were $918.1 million compared with $690.6 million in the first six months of 2021. Tobacco operations contributed $41.9 million in operating income, 17 percent more than in the comparable 2021 period.
“Demand for both our tobacco and plant-based ingredients products remains very strong, and we are excited about how our fiscal year 2023 is developing,” said Universal Corp. Chairman, President and CEO George C. Freeman III in a statement.
“We are seeing improvement in shipping availability, particularly in Brazil, where we were able to ship large amounts of carryover tobacco in both the six months and quarter ended Sept. 30, 2022. We also remain very pleased with our strategic investment in our plant-based ingredients platform. Our Ingredients Operations segment diversifies our earnings and delivered higher results driven by higher sales in both the six months and quarter ended Sept. 30, 2022, compared to the same periods in the prior fiscal year.
“We believe we are through our peak seasonal working capital requirements for fiscal year 2023, and we expect a considerable reduction in debt levels over the next two fiscal quarters. We have already seen significant working capital receipts in October 2022. Our tobacco shipments, which are weighted to the second half of our fiscal year, should enable us to reduce our debt levels from the elevated Sept. 30, 2022, levels as payments are received from our customers.”
All types of leaf tobacco, but particularly burley, are currently in an undersupply position, according to Freeman. By the end of September, Universal’s tobacco inventories were nearly 90 percent committed for sale.