Category: Financial

  • Investors Press KT&G on Ginseng Spinoff

    Investors Press KT&G on Ginseng Spinoff

    Photo: KT&G

    A group of activist funds has filed an injunction at the Deajeon District Court in South Korea demanding that KT&G address their demand to spin off its lucrative ginseng business, appoint certain outside directors and strengthen its shareholder return policy, reports The Korea Times.

    Led by the Singaporean activist private equity fund Flashlight Capital, the group has repeatedly demanded that the ginseng business be spun off for to recover corporate value and share prices.

    However, during an investor relations event last month, KT&G rebuffed the request. “The spinoff will have little to no benefit to the company’s corporate value and shareholders from a long-term perspective,” said KT&G Senior Executive Vice President Bang Kyung-man.

    Bang expressed concern that KT&G would potentially lose “synergy” in the event of the ginseng unit’s separation.

    During the meeting, KT&G also dismissed the funds’ demand to strengthen KT&G’s shareholder return policy. The cigarette and ginseng product manufacturer said the current policy “should hold for now.”

    Flashlight Capital founder Lee Sang-hyun believes KT&G’s share price will bounce back to over KRW140,000, a level last seen in 2016, once the firm reorients its investment portfolio to better achieve environmental, social and governance goals.

    KT&G’s share price hit a low of KRW87,100 on Feb. 17 but has recovered since.

  • Mativ Holdings Reports Results

    Mativ Holdings Reports Results

    Photo: SWM

    Mativ Holdings reported sales of $660.1 million in the fourth quarter of 2022, up 69 percent over those reported in the comparable 2021 quarter, reflecting 6 percent constant currency organic sales growth and the benefit of the merger between Neenah and Schweitzer-Mauduit International that created the holding. GAAP Income was $2.5 million and GAAP operating profit was $26.9 million, which all included significant expenses related to the Neenah merger integration.

    For the full year 2022, sales increased 51 percent to $2.17 billion, reflecting 11 percent constant currency organic sales growth and the benefit of the merger. GAAP loss was $6.6 million and GAAP operating profit was $51.4 million, which all included significant expenses related to the Neenah merger closing and integration.

    “2022 was a historic year for Mativ, bringing together two strong companies to leverage our combined technologies and products to drive value for all of our stakeholders,” said Mativ Holdings CEO Julie Schertell in a statement. “We closed out the year with strong year-over-year fourth-quarter growth for the combined company from continued positive price/cost performance, and we enter 2023 with clear momentum on integration and synergy execution.

    “Despite macro uncertainties, our conviction in the opportunities ahead for Mativ is unwavering. We have significant controllable actions to enable strong performance as we enter 2023, specifically cost synergies, innovation and programs focused on commercial and operational excellence, as well as broader, longer term decisions and actions to capitalize on our increased scale.”

  • Sales Down at Turning Point

    Sales Down at Turning Point

    Photo: crizzystudio

    Turning Point Brands reported consolidated net sales of $103.4 billion the fourth quarter of 2022, down 1.8 percent from the comparable 2021 quarter. Gross profit decreased 1.5 percent to $49.6 million. Net sales for the Zig-Zag and Stoker products increased 0.9 percent and 2.6 percent, respectively, while sales of new-generation products declined by 11.1 percent.

    For the full year, consolidated net sales decreased by 6.8 percent to $415 million. Gross profit was down 5.6 percent to $205 million. Net sales for Zig-Zag and Stoker’s products increased 7.9 percent and 5.3 percent, respectively, while sales of new generation declined by 35.2 percent

    “The fourth quarter operating results finished in-line with our expectations with solid execution across our segments,” said TPB President and CEO Graham Purdy in a statement.

    “The Zig-Zag segment grew during the quarter despite the impact of a previously disclosed pull-forward in the prior quarter, benefitting from continued market share gains and the contribution from a full quarter of CLIPPER lighters. We are pleased with the ongoing roll-out and strong channel receptivity to the world’s No. 1 reusable lighter. Stoker’s MST experienced strong share gains as consumer trade-downs to value accelerated, consistent with the current inflationary and economic backdrop.

    “The challenging regulatory environment continues to negatively affect the NewGen segment which was down materially vs. 2021, but with declines moderating in the back half of the year. In addition to returning capital to our shareholders through share repurchases, we opportunistically purchased $10 million notional of our convertible notes during the fourth quarter while maintaining a strong cash balance.

    ”Over the last few months since taking on the CEO role, my primary objective has been to re-direct our focus and energy towards driving organic long-term growth. This starts with allocating resources to products, initiatives, and channels best positioned towards this goal. Our organization is now better aligned towards capitalizing on the opportunities in front of us and we look forward to delivering against our long-term plans going forward.”

  • Parkside Posts Strong Results in Difficult Year

    Parkside Posts Strong Results in Difficult Year

    Photo: Parkside

    Flexible packaging expert Parkside has reported strong year-on-year growth despite a challenging 12 months for the industry.

    Reaping the rewards of significant recent investments made to its global operations, the company says it is on track to achieve its five-year objectives after reporting year-on-year growth of 28.1 percent, returning to pre-pandemic levels.

    “With continued supply chain chaos, a lack of raw materials, labor shortages and a string of complex new laws hitting many national markets, we know times are tough for many in the packaging industry,” said Parkside Managing Director Robert Adamson. “Against that backdrop we remained resolute in our commitment to innovation, and we could not be happier with these results which show the company continues to go from strength to strength.”

    In the face of ongoing global concerns, Parkside has significantly invested in both its U.K. and Asian capabilities.

    The company’s most recent investments include an Allstein printing press and a Universal slitting machine in its Normanton, U.K. factory. The two machines improve the capacity, efficiency and energy consumption of the facility while ensuring its print quality standards remain ahead of the curve.

    The company’s operations in Malaysia were also boosted by the recent appointments of Paula Birch as managing director of Asia, and Business Unit Manager Ian Dewar, who has formidable knowledge of the APAC market and the plastics industry.

    “This growth would not be possible without the hard work, passion, and endless creativity of all our staff, who drive this company to new heights every day,” added Adamson. “So many long-serving team members have come along on this journey with us, and it is hugely rewarding to have seen the number of internal moves and promotions that we have this year, as we look to the future and explore new frontiers as a company.

    “We are developing new business within the tobacco market, crafting exciting new marketing strategies, and with our new MD for Asia we continue to open up new geographic markets and product applications.”

  • Vector Group Reports Fourth-Quarter and Full-Year Results

    Vector Group Reports Fourth-Quarter and Full-Year Results

    Image: Tobacco Reporter archive

    Vector Group reported record annual tobacco segment revenues in 2022, fueled by continued strong volume.

    In the fourth quarter, consolidated revenues were $363.8 million, up 16 percent, or $50.1 million, compared to the prior year period. Tobacco segment revenues were $363.8 million, up 18.6 percent, or $57.2 million, compared to the prior year period. Tobacco segment wholesale and retail market share increased to 5.5 percent and 5.8 percent from 4.4 percent and 4.4 percent, respectively, in the prior year period. Reported operating income was $89.3 million, up $20.7 million compared to the prior year period. Tobacco segment operating income was $93 million, up 11 percent, or $9.2 million, compared to the prior year period, primarily attributable to the transition of the Montego brand strategy from volume-based to income-based.

    For the full year, record consolidated revenues were $1.44 billion, up 18 percent, or $220.3 million, compared to the prior year. Tobacco segment revenues were $1.43 billion, up 18.5 percent, or $222.6 million, compared to the prior year. Tobacco segment wholesale and retail market share increased to 5.4 percent and 5.5 percent from 4.1 percent and 4.2 percent, respectively, in the prior year. Reported operating income was $339 million, up $18.6 million compared to the prior year. Tobacco segment operating income was $347 million, down 3.7 percent, or $13.3 million, compared to the prior year, primarily attributable to the investment in Montego’s significant volume and market share growth.

    “Vector Group delivered record revenues in 2022 by capitalizing on opportunities to substantially increase our market share, thus driving value for stockholders,” said Howard M. Lorber, president and CEO of Vector Group. “The 11 percent increase in our tobacco segment’s operating income in the fourth quarter reflects the recent and ongoing transition of our Montego brand strategy from volume-based to income-based. In 2023, we will continue to focus on optimizing long-term profit by effectively managing our volume, pricing and market share.”

  • Pyxus Announces Third-Quarter Results

    Pyxus Announces Third-Quarter Results

    Image: Tobacco Reporter archive

    Pyxus International announced results for its fiscal quarter ended Dec. 31, 2022.

    Sales and other operating revenues increased $226.7 million, or 52.9 percent, to $655.6 million for the three months ended Dec. 31, 2022.

    Operating income increased $11.4 million to $41.6 million for the three months ended Dec. 31, 2022.

    Net loss attributable to Pyxus International improved by $27.8 million to $2.3 million for the three months ended Dec. 31, 2022.

    “We are excited to share our third-quarter results,” said Pieter Sikkel, president and CEO of Pyxus. “Our improved operating profit illustrates the company’s strong global performance in spite of a dynamic and complicated crop year that was exacerbated by La Nina and inflationary pressures. Our results evidence the progress the company made year-over-year in several ways and would not have been possible without the dedication and contributions of our employees.

    “We successfully utilized our global footprint to navigate the current tobacco supply shortage and meet our buying targets overall for fiscal 2023. Combined with continuing normalization of shipping schedules in North and South America and increased volume from Asia, the company delivered an increase of more than 50 percent in sales and other operating revenues year-over-year. This increase and higher utilization of the company’s securitization programs resulted in cash flow from operations in the third quarter increasing by more than $100 million year-over-year. Some of these funds were strategically utilized to fully repay the outstanding indebtedness under the company’s ABL Credit Facility and provides the company with increased financial flexibility as we approach the next buying cycle.

    “We anticipate the third quarter to be our largest sales quarter of the fiscal year due to more normalized shipping schedules. Based on our expectations for continued improvement year-over-year, we have revised our expected fiscal 2023 sales to be between $1.85 billion and $2 billion and our adjusted EBITDA expectations to be between $140 million and $155 million.”

  • JT Reports Strong Results for 2022

    JT Reports Strong Results for 2022

    Image: Tobacco Reporter archive

    Japan Tobacco reported revenue of ¥2.66 trillion ($19.97 billion) in 2022, up 14.3 percent over the previous fiscal year.

    Operating profit increased by 31 percent to ¥653.6 billion. Profit increased by 30.8 percent to ¥442.7 billion.

    For full-year 2023, revenue is forecast to decrease by 1.1 percent to ¥2,629 billion. Operating profit is forecast to decrease by 6.4 percent to ¥612 billion. Profit attributable to owners of the parent company is forecast to decrease by 0.6 percent to ¥440 billion.

    Masamichi Terabatake

    “The JT Group reported another strong performance in 2022, driven by solid pricing and sustained market share gains in the tobacco business, overcoming the global challenges,” said Masamichi Terabatake, president and CEO of the JT Group, in a statement. “We continued to make progress in the reduced-risk products category, with Ploom X increasing share in the HTS (heated-tobacco sticks) segment in Japan and the launch of Ploom X in London.”

  • Income Up for Universal

    Income Up for Universal

    Image: thanksforbuying | Adobe Stock

    Universal Corp.’s net income for the nine months ended Dec. 31, 2022, was $70.3 million, or $2.82 per diluted share, compared with $60.8 million, or $2.44 per diluted share, for the nine months ended Dec. 31, 2021, according to a company press release. Excluding certain nonrecurring items, net income and diluted earnings per share increased by $1.1 million and $0.04, respectively, for the nine months ended Dec. 31, 2022, compared to the nine months ended Dec. 31, 2021.

    Operating income of $128.7 million for the nine months ended Dec. 31, 2022, increased by $25.5 million compared to operating income of $103.2 million for the nine months ended Dec. 31, 2021. Adjusted operating income of $128.7 million increased by $12.2 million for the nine months ended Dec. 31, 2022, compared to adjusted operating income of $116.5 million for the nine months ended Dec. 31, 2021.

    Net income for the quarter ended Dec. 31, 2022, was $41.7 million, or $1.67 per diluted share, compared with $34.9 million, or $1.40 per diluted share, for the quarter ended Dec. 31, 2021. Excluding certain nonrecurring items, net income and diluted earnings per share decreased by $3.1 million and $0.13, respectively, for the quarter ended Dec. 31, 2022, compared to the quarter ended Dec. 31, 2021.

    Operating income of $77.5 million for the quarter ended Dec. 31, 2022, increased by $14.8 million compared to operating income of $62.8 million for the quarter ended Dec. 31, 2021. Adjusted operating income of $77.5 million increased by $2.7 million for the third quarter of fiscal year 2023 compared to adjusted operating income of $74.9 million for the third quarter of fiscal year 2022.

    Consolidated revenues increased by $419.2 million to $1.9 billion for the nine months ended Dec. 31, 2022, compared to the same period in fiscal year 2022, on higher tobacco sales volumes and prices as well as the addition of the business acquired in October 2021 in the ingredients operations segment. For the quarter ended Dec. 31, 2022, consolidated revenues were $795 million, an increase of $142.4 million compared to $652.6 million for the quarter ended Dec. 31, 2021, on higher tobacco sales volumes and prices.

    George C. Freeman III, chairman, president and CEO of Universal, stated, “We are extremely pleased with our results driven by strong tobacco shipments in the nine months and quarter ended Dec. 31, 2022, compared to the same periods in fiscal year 2022. Tobacco shipments are generally moving smoothly, and we are not seeing the logistical constraints that we saw in the prior fiscal year. Our ingredients operations segment also continued to positively contribute to and diversify our results in the nine months and quarter ended Dec. 31, 2022.

    “There continues to be significant demand for leaf tobacco with all types of leaf tobacco currently in an undersupply position. Short burley tobacco crops in Africa, largely due to weather conditions, have contributed to the lower leaf tobacco supply. As of Dec. 31, 2022, our uncommitted inventory levels stood at less than 7 percent of our tobacco inventory, an exceptionally low level. Although it is still early, we are forecasting larger crops in several key tobacco origins in fiscal year 2024.

    “In our ingredients operations segment, we recently have been experiencing some softening of demand for some of our ingredients products, which we believe is temporary and largely due to customers adjusting their inventory levels. Some of our ingredients customers have been carrying higher inventory levels because of supply chain uncertainties. Increased costs, particularly selling, general and administrative expenses, including costs related to the expansion of sales and product development resources and deferred compensation costs from acquisitions, reduced our results for our ingredients operations segment in the quarter and nine months ended Dec. 31, 2022.”

    “We successfully refinanced and expanded our bank credit facility in the quarter ended Dec. 31, 2022, positioning us to meet our future financial needs,” Freeman said. “In line with our previous expectations, we also reduced our outstanding borrowings considerably in the three months ended Dec. 31, 2022, as we moved beyond our peak working capital requirements for fiscal year 2023.

    “Our fiscal year 2022 Sustainability Report was published in December 2022 and is available on our website.”

  • New Category Growth Drives BAT Revenue

    New Category Growth Drives BAT Revenue

    Image: Miha Creative | Adobe Stock

    BAT released its 2022 financial results, showing that revenue was up 2.3 percent, driven by new category growth and pricing. Adjusted profit from operations was up 4.3 percent, absorbing a negative transactional foreign currency impact of 1.5 percent.

    For 2023, the company expects the global tobacco industry volume to be down about 2 percent. An organic constant currency revenue growth of 3 percent to 5 percent is expected, with reported growth impacted by the timing of the transfer of the Russian and Belarussian businesses expected to close in 2023.

    “We continue to accelerate our ‘A Better Tomorrow’ transformation at speed,” said BAT CEO Jack Bowles. “Driven by our strong new category momentum, (with revenue approaching £3 billion), we are confident in our £5 billion ($6.09 billion) revenue target by 2025 and now expect new category profitability in 2024, one year ahead of plan.

    “Our new category business delivered strong volume, revenue and market share growth and has become a significant contributor to the group’s financial delivery. In 2022, we invested more than £2 billion in new categories to drive long-term sustainable growth while making excellent progress in reducing operating losses by 62 percent.

    “While reported results were impacted by a number of one-off charges, we achieved a 150 bps improvement in adjusted operating margin at current rates and another year of 100 percent operating cash conversion, demonstrating our ability to successfully navigate an increasingly challenging macroeconomic environment. This enabled us to return £6.9 billion to shareholders in 2022. I am proud of our people and their focus on delivery of our three strategic priorities, demonstrating once again the strength and resilience of our business.

    “Looking forward, while we expect the macroeconomic environment to remain challenging, we will continue to deliver and further accelerate our transformation. We will leverage our well-established multi-category brand portfolio, our new regional structure to enable even greater collaboration and accelerated decision-making and our new market archetype model to guide our strategic choices and resource allocation to further enhance returns.”

  • PMI Reports Strong Results for 2022

    PMI Reports Strong Results for 2022

    Image: Nuthawut | Adobe Stock

    Philip Morris International announced its 2022 fourth-quarter and full-year results. Given the impact of the war in Ukraine on the company’s operations in Russia and Ukraine in 2022, PMI also provided figures and comparisons excluding the company’s operations in these two markets for all historical periods. To provide more clarity on the full extent of the company’s business in 2023, PMI included both Ukraine and Russia in its 2023 forecast and adjusted reporting.

    For the full year, net revenues from smoke-free products accounted for 32.1 percent of total net revenues, or 31.3 percent excluding Russia and Ukraine. Following the acquisition of Swedish Match, PMI defines “smoke-free products” to include all Swedish Match products other than Swedish Match’s combustible tobacco products in addition to PMI’s heat-not-burn, e-vapor, oral nicotine and wellness and healthcare products. Market share for heated-tobacco units (HTUs) in IQOS markets were up by 1.1 points to 8 percent, or by 1.4 points to 7.9 percent excluding Russia and Ukraine. The company increased regular quarterly dividend by 1.6 percent to $1.27 per share, or an annualized rate of $5.08 per share.

    For the fourth quarter, net revenues from smoke-free products accounted for 36 percent of total net revenues, or 35.6 percent excluding Russia and Ukraine. Market share for HTUs in IQOS markets was up by 1.4 points to 8.5 percent, or up by 1.8 points to 8.5 percent excluding Russia and Ukraine. Total IQOS users at quarter end were estimated at approximately 24.9 million, of which approximately 17.8 million had switched to IQOS and stopped smoking (approximately 20.3 million and 14.2 million, respectively, excluding Russia and Ukraine).

    “Despite the challenging operating environment in 2022, due to the war in Ukraine as well as supply chain and global inflationary pressures, we delivered very strong full-year adjusted results led by the continued growth of IQOS and a robust performance in the combustible tobacco category,” said Jacek Olczak, PMI CEO.

    “We are well on our way to becoming a majority smoke-free company, with smoke-free products accounting for almost one-third of our total net revenues for the year. With the acquisition of Swedish Match and the agreement to take full control of IQOS in the U.S. in April 2024, we achieved two important milestones in our smoke-free transformation in 2022 and are well positioned to accelerate this journey.

    “We enter 2023 as a truly global smoke-free champion, with two of the industry’s leading smoke-free brands, IQOS and Zyn, and continued innovation across our broader smoke-free product portfolio. For the year, we forecast organic top-line growth of 7 percent to 8.5 percent and currency-neutral adjusted diluted EPS growth of 7 percent to 9 percent despite inflationary pressures and transitory impacts related to Iluma deployment.

    “For Swedish Match, we expect continued strong growth from the business in 2023, following a very strong finish to the year led by Zyn in the U.S.”