Category: Financial

  • Covid-19 Weighs on Universal’s Half Year

    Covid-19 Weighs on Universal’s Half Year

    Photo: Taco Tuinstra

    Universal Corp. reported net income of $14.8 million for the first half of fiscal year 2021, compared with $30.1 million for the same period of the prior fiscal year. Excluding certain nonrecurring items, net income declined by $23.9 million. Operating income was $24.9 million, down from $50.7 million in the first six months of 2019.

    George Freeman

    “Timing factors related to Covid-19 continued to impact our results in the second quarter of fiscal year 2021,” said George C. Freeman III, chairman, president and CEO of Universal, in a statement. “Our tobacco customer orders for crop year 2020 are strong, however, and the vast majority of these committed orders are packed awaiting shipment, with customer mandated shipment timing heavily weighted to our fourth quarter of fiscal year 2021.

    “In addition, our uncommitted inventories have come down significantly from the levels at the end of fiscal year 2020 and are at 16 percent of tobacco inventories as of September 30, 2020, which is well within our target range.

    “At this time, we believe our adjusted operating income for fiscal year 2021, excluding acquisitions, will materially exceed that of fiscal year 2020 barring any unforeseen events including shipment delays due to lack of vessel or container availability, port congestion, or Covid-19 related uncertainties. We are closely monitoring shipping conditions and currently expect to complete our scheduled shipments prior to our 2021 fiscal year end.”       

  • Strong Quarter for Scandinavian Tobacco

    Strong Quarter for Scandinavian Tobacco

    Photo: STG

    Net sales of Scandinavian Tobacco Group (STG) grew to DKK2.23 billion ($354.89 million) in the third quarter of 2020, up from DKK1.81 billion in the comparable 2019 period. EBITDA before special items was DKK614 million after 32.5 percent organic growth. The EBITDA margin was 27.5 percent.

    STG attributed its performance in part to changes in consumer behavior following the outbreak of the Covid-19 pandemic in the second quarter of 2020, with high tobacco consumption continuing across product categories and markets. In addition to increasing demand for handmade cigars in the U.S., sales of pipe tobacco and fine cut tobacco have performed better in several markets.

    While the increased cigar consumption in the U.S. is expected to continue in the near term, STG expects its financial performance in the fourth quarter to be negatively impacted by the loading of net sales in previous quarters and strong comparison numbers partly driven by the change in sales taxing in France in the fourth quarter 2019.

    Niels Frederiksen

    “We are able to present a very strong result for the third quarter with double-digit growth in net sales, EBITDA and cash flow, said STG CEO Niels Frederiksen in a statement. “However, we maintain our guidance for the full year as we expect our financial performance in the fourth quarter to be negatively impacted by phasing, a temporary increase in the OPEX ratio and strong comparisons numbers.”

  • Sales up at Schweitzer-Mauduit

    Sales up at Schweitzer-Mauduit

    Photo: SWM

    Schweitzer-Mauduit International (SWM) reported sales of $279.3 million in the third quarter of 2020, up 9 percent over those in the 2019 third quarter. GAAP operating profit was $37 million, up 7 percent, and adjusted operating profit was $52.7 million, up 26 percent.

    SWM’s engineered papers segment sales were $140.4 million, up 8 percent, driven by a 2 percent volume increase and favorable price/mix performance of 6 percent. Higher volumes benefited from strong growth across cigarette paper products as customers increased inventory levels to de-risk their supply chains in the event of future disruptions from Covid-19.

    These volume gains were partially offset by the continued de-emphasizing of lower margin nontobacco paper products. Price/mix improved due to the strong sales of higher value cigarette papers, including low-ignition propensity papers coupled with the favorable mix impact of lower nontobacco volumes.

    “We are pleased to report a strong quarter with sales and adjusted profit growth in both segments,” said SWM CEO Jeff Kramerin a statement. “While the pandemic continued to impact some of our end markets, the global SWM team continues to perform well under challenging circumstances. All of our sites were fully operational throughout the entire quarter, a testament to our people’s commitment to the safety protocols implemented across the company.”

  • Altria Results Demonstrate Resilience

    Altria Results Demonstrate Resilience

    Photo: Altria Group

    Altria Group’s net revenues rose by 3.9 percent to $7.12 billion and by 3.9 percent to $19.85 billion in the third quarter and the first nine months of 2020, respectively, when compared to the same periods in 2019.

    “Altria continued to demonstrate its resilience during the third quarter while navigating the challenges presented by the Covid-19 pandemic,” said Altria CEO Billy Gifford in a statement. “In the third quarter, our tobacco businesses delivered strong financial performance once again and we continued to make progress against our 10-year Vision.”

    Altria noted that Philip Morris USA expects its heat-not-burn IQOS devices to be available for sale in select Charlotte, North Carolina, convenience stores sometime in November while Helix expanded the distribution of On! by an additional 16,000 stores with its modern oral product now available in 56,000 stores as of the end of the third quarter.

    While tobacco analysts from Morgan Stanley noted that Altria’s third-quarter results were ahead of expectations, Philip Morris’ recent write-down of Juul was larger than expected.

  • JT Ups Forecast After Strong Quarter

    JT Ups Forecast After Strong Quarter

    Masamichi Terabatake (Photo: JT)

    Japan Tobacco’s (JT) revenue decreased 2.5 percent to ¥1.59 trillion ($15.25 billion) in the third quarter of 2020. Adjusted operating profit at constant currency increased 6.3 percent to ¥479.8 billion. On a reported basis, adjusted operating profit decreased 2.2 percent to ¥441.5 billion. Operating profit decreased 11.4 percent to ¥390.2 billion, while profit attributable to owners of the parent company decreased 18.4 percent to ¥257.9 billion.

    JT revised its revenue and adjusted operating profit at constant currency forecasts for fiscal year 2020 upward by ¥60 billion and ¥30 billion, respectively. The company also revised upward its adjusted operating profit on a reported basis forecast (by ¥26 billion), its operating profit forecast (¥42 billion) and its profit attributable to the owners of the parent company forecast (¥24 billion).

    “The JT Group posted encouraging results in the year-to-date, driven by strong underlying fundamentals, despite a challenging operating environment, and our adjusted operating profit at constant currency grew due to the share and pricing gains in the international tobacco business,” said Masamichi Terabatake, president and CEO of the JT Group, in a statement.

    “Our forecasts are revised upward following the strong year-to-date performance as well as efficient cost management while we continue to invest in high priority activities, and we have confidence in achieving the revised forecast.

    “Looking ahead and taking into account the prevailing and highly uncertain environment, we will continue investments to offer products and services with agility, as we adapt to evolving ways of working and changing consumer needs.”

  • Juul Labs Cuts Valuation Again

    Juul Labs Cuts Valuation Again

    Juul starter kit

    Juul Labs has cut its valuation to about $10 billion from $12 billion at the end of last year, reports Reuters.

    Juul was valued at $38 billion in December 2018, when Altria Group took a 35 percent stake in the company.

    The latest write down follows recent decisions to exit certain markets and related restructuring costs, according to the memo sent to Juul employees by chief executive officer K.C. Crosthwaite.

    “Today’s valuation does not surprise me, and I expect other investors to also arrive at lower valuation marks that factor in our recent restructuring,” he reportedly said.

    Juul has faced heightened regulatory scrutiny following a rise in teenage vaping and a ban on the sale of popular flavors.

    In September, the company said it would make a significant cut to its global workforce and explore pulling out of some European and Asia-Pacific markets to save cash.

    Earlier this month, the company announced its exit from Germany.

  • TPB Raises Guidance After Strong Quarter

    TPB Raises Guidance After Strong Quarter

    Image by Steve Buissinne from Pixabay

    Turning Point Brands (TPB) reported net sales of $104.2 million in the third quarter of 2020, up 7.6 percent over those of last year’s third quarter.

    Gross profit increased 12.8 percent to $48.3 million. Net income increased $1.5 million to $7.8 million, despite PMTA costs incurred during the current quarter.

    Adjusted EBITDA increased 27.4 percent to $23.9 million.

    “Streamlining and repositioning the business at the end of 2019 has paid dividends throughout 2020,” said Larry Wexler, president and CEO of TPB, in a statement.

    “Smokeless saw continued same store sales momentum in MST and newfound strength in loose leaf chewing tobacco. Smoking (Zig-Zag) saw its highest growth rate in recent history driven by product and channel growth initiatives behind rolling papers, the benefits of greater control of our MYO cigar wraps business after the Durfort transaction closed in the second quarter, and a burgeoning e-commerce presence, he said.

    “The NewGen segment navigated admirably through significant market disruption caused by the PMTA application deadline, said Wexler. “Overall, we are seeing ongoing benefits from reshaping our business towards a more growth-oriented mindset and are able to raise our outlook once again for the remainder of the fiscal year.”

    TPB also revised its 2020 guidance provided on July 28, 2020. Absent any further acquisitions, the company projects 2020 net sales to be between $395 million and $401 million, up from previous guidance of $370 million to $382 million.

  • Record Quarter for Swedish Match

    Record Quarter for Swedish Match

    Photo: Swedish Match

    Swedish Match reported record sales and operating profit from product segments in the third quarter of 2020.

    Sales and operating profit increased for the Smokefree and Cigars segments in both the U.S. and Scandinavia, elevated by Covid-19 related effects on consumer demand and channel shifts.

    In local currencies, sales increased by 23 percent for the third quarter. Reported sales increased by 15 percent to SEK4.4 billion ($504 million).

    In local currencies, operating profit from product segments increased by 37 percent for the third quarter. Reported operating profit from product segments increased by 28 percent to SEK2.05 billion

    Operating profit amounted to SEK2.02 billion for the third quarter.

    Profit after tax, which includes a charge of SEK286 million following adverse ruling in a tax case, amounted to SEK1.19 billion for the third quarter.

    Lars Dahlgren

    “Swedish Match delivered an outstanding performance during the third quarter,” said CEO Lars Dahlgren, CEO of Swedish Match in the company’s quarterly report. “While we estimate that Covid-19 related effects had a notably positive net impact on group earnings, the underlying financial development across our product segments was strong.

    “Impressive performance for Zyn in the U.S. continued to be the key contributor to profit growth. For this quarter we also noted a significant upturn in operating profit for our U.S. cigar business, as well as for our Scandinavian smokefree business—even when excluding Covid-19 related positive mix effects from increased domestic volumes in Norway that substituted deliveries to border trade and travel retail outlets.”

  • Stora Enso Reports ‘Solid Performance’

    Stora Enso Reports ‘Solid Performance’

    Photo: Tobacco Reporter archive

    Sales of Stora Enso decreased by 13.5 percent to €2.08 billion ($2.46 billion) in the third quarter of 2020 over the comparable 2019 quarter, due to lower deliveries and prices. The company reported an operating profit of €145 million, down from €170 million in the previous quarter.

    “We have delivered a solid result for the quarter and I am satisfied with our performance, considering the unprecedented uncertainty and volatility on markets around the world,” said Stora Enso President and CEO Annica Bresky in the company’s interim report.

    “Although we report a decreased operational EBIT of €175 million compared to last year, excluding paper, operational EBIT remained at the same level due to strong results in the packaging materials, wood products and forest divisions.

    “The pandemic’s biggest effect continues to be on our paper business. I was very glad to see a return to positive cash flow for the quarter. The market also remains challenging for biomaterials, with low pricing. On a positive note, excluding paper, our operational EBIT margin increased to 11.8 percent, a sign of the resilience of our growth businesses and good cost management.”

    Stora Enso has discontinued its quarterly guidance and annual outlook until further notice, due to the uncertainty in the global economy.

     

  • PMI Reports Third-Quarter Results

    PMI Reports Third-Quarter Results

    Photo: PMI

    Philip Morris International (PMI) reported net revenues of $7.45 billion in the third quarter of 2020, down 2.6 percent from the comparable 2019 quarter. Operating income was $3.24 billion, compared to $2.79 billion in last year’s quarter. On an adjusted basis, operating income was up 1.9 percent, while the company’s adjusted operating income margin improved to 43.6 percent from 41.7 percent between the two quarters.

    PMI’s cigarette and heated tobacco unit shipments were down by 7.6 percent, reflecting a decline in cigarette shipments of 9.8 percent to 165.46 billion units and an increase of heated tobacco unit shipments of 18.7 percent to 19 billion units.

    The company estimates the total number of IQOS users at quarter-end at approximately 16.4 million, of which approximately 11.7 million have stopped smoking and switched to IQOS.

    “We delivered stronger-than-anticipated results in the third quarter, despite the ongoing challenges of the pandemic, with adjusted diluted EPS [earnings per share] growth of 5.6 percent on an organic basis,” said PMI CEO Andre Calantzopoulos in a statement.

    “The sustained momentum of IQOS was excellent, with an estimated 16.4 million total users at the end of September and smoke-free products accounting for nearly one-fourth of our total net revenues in the quarter.

    “Furthermore, our combustible tobacco business recorded an improved sequential performance, supported by better underlying total industry volumes across both developed and emerging markets.

    “Despite continued headwinds for our duty-free business and in Indonesia, we are raising our full-year 2020 guidance and now anticipate adjusted diluted EPS growth of around 5 percent to 6 percent on an organic basis, compared to a range of approximately 3.5 percent to 5.0 percent previously,” Calantzopoulos said.

    PMI further noted that, despite the ongoing Covid-19 pandemic, it has sufficient access to inputs for its products and is not facing any significant business continuity issues with respect to key suppliers.

    Most of its manufacturing facilities, including all heated tobacco unit factories, are operational. The company also has adequate inventories of finished goods based on existing sales trends.