Category: Financial

  • Shareholders go to court

    Shareholders go to court

    In a petition filed in a North Carolina US Federal court, Reynolds American Inc. shareholders have alleged the company and its directors are withholding important information regarding the company’s proposed acquisition by British American Tobacco, according to a Law360 story relayed by the TMA.

    The shareholders said a proxy statement related to the proposed deal did not contain material information related to RAI’s financial projections and analyses of the proposed merger by its financial advisers Goldman Sachs.

    In a note posted on its website on June 14, RAI announced a special meeting of shareholders to approve the terms of its takeover by BAT and related payments to RAI’s executives.

    The meeting is due to be held on July 19 in Winston-Salem, North Carolina.

    ‘Subject to the satisfaction or waiver of the conditions as set out in the merger agreement, including approval by shareholders of both BAT and RAI, it is currently expected that the proposed transaction will close on or about July 25, 2017,’ the note said.

  • SM announces buy-back

    SM announces buy-back

    Swedish Match said today that it had resolved to initiate a share buy-back program worth up to SEK250 million.

    The program was due to run between June 20 and July 21.

    The company said the program ‘formed part of Swedish Match’s existing strategy to return excess cash to its shareholders’.

    ‘Repurchased shares will be used to reduce Swedish Match’s share capital by cancellation of shares,’ according to a note posted on the company’s website.

  • MSA scam alert

    MSA scam alert

    At least two US state attorneys general have issued warnings about an online promotion that wrongly suggests people are entitled to receive tobacco settlement money.

    The Master Settlement Agreement (MSA) is a settlement reached between the nation’s four largest tobacco companies and attorneys general from 46 states and territories under which the tobacco companies agreed to pay the states $206 billion during the first 25 years of the agreement. There is no provision for payments to individuals.

    In alerting people to the deception, West Virginia’s Attorney General Patrick Morrisey said the online promotion misled consumers into believing they could receive tobacco settlement money.

    The online promotion claimed individuals could sign up for the MSA agreement, he said. But despite the promotion’s assertion, there was no mechanism for payments to consumers. Payments were made each year to the states and territories.

    “Everyone likes the idea of obtaining extra money,” said Morrisey. “It’s very important to ensure that promotions seeking or promising money are legitimate.”

    According to a statement issued by Morrisey, the promotion misled the consumer by talking about bond purchases backed by settlement money, rather than guidance on how to receive settlement dollars.

    ‘The end goal involves a pitch for consumers to buy a subscription to a monthly report in order to learn more,’ the statement said. ‘Subscribers are charged approximately $5 for the first month and $100 for a one-year subscription. It is difficult to cancel once an individual provides their credit card information.’

    Meanwhile, the day after Morrisey made his statement, Nevada’s Attorney General Adam Paul Laxalt issued a similar warning, telling Nevadans of a ‘recent set of deceptive advertisements related to the Tobacco Master Settlement Agreement’. ‘These advertisements mislead consumers into believing they are eligible to receive tobacco settlement money,’ he said.

    ‘The online advertisements lead consumers to believe that they can claim thousands of dollars per month from the tobacco settlement through a special program. The advertisement, which promises a tax-free portion of the Tobacco Master Settlement Agreement, misleads consumers into believing they are eligible for guaranteed money backed by the government.’

  • Sales down at Alliance

    Sales down at Alliance

    The outlook for global leaf-tobacco market-conditions in fiscal year 2018 are positive, with good early weather patterns supporting better global growing conditions than occurred in the previous year, according to the CEO and president of Alliance One International, Pieter Sikkel, in yesterday reporting results for the company’s fourth-quarter and fiscal year 2017.

    Full-year sales were reportedly down by 10.0 percent to $1,714.7 million mainly because of smaller crops in the US, Brazil and Tanzania, primarily caused by El Niño weather conditions, the strong US dollar, changes in product mix and the timing of crops.

    Gross profit as a percentage of sales improved to 12.7 percent from 11.9 percent, while gross profit fell by 3.9 percent to $217.0 million due to lower volume and average sales price.

    The net loss was $62.9 million, while adjusted EBITDA was $136.6 million or 8.0 percent of sales.

    “With our heavy weighting in Brazil, the United States and Tanzania – three crops that were hit hardest by El Niño and had related reductions in crop size and yields and consequently increases in conversion cost – we were significantly impacted in fiscal 2017 by unusual and uncontrollable events, which overshadowed substantial improvements in many origins and targeted improvements to the balance sheet,” said Sikkel…

    “As we look to fiscal year 2018, global market conditions are positive with good early weather patterns that support better global growing conditions. These conditions should result in increased crop sizes in Brazil and Argentina.

    “We have almost completed buying in Zimbabwe and are approximately 65 percent complete in Brazil.”

    Sikkel said the 2016 Brazilian Virginia flue-cured crop was small, at about 410 million kg, but that the good-quality 2017 crop was about 50 percent bigger, at 600 million kg.

    The Malawi crop was smaller this year while the US crop was only now in the ground.

    “Based on current conditions, our internal forecast anticipates significantly increased full-service and processing volumes, improved sales and pricing, as well as improved adjusted EBITDA for fiscal year 2018 when compared to fiscal 2017,” said Sikkel.

    “Sales are anticipated to be in a range of approximately $1,900.0 million to $2,000.0 million with adjusted EBITDA in a range of approximately $165.0-$185.0 million.”

  • Flue-cured output to rise

    Flue-cured output to rise

    The chairman, president, and CEO of Universal Corporation, George C. Freeman, III, has predicted that global flue-cured tobacco production outside China will increase by about nine percent in the fiscal year to the end of March 2018.

    This increase would largely stem from the recovery of the Brazilian crop due to better weather conditions, he said.

    At the same time, Burley production would decrease by about eight percent, primarily due to reductions in Africa.

    In presenting Universal’s annual results to the end of March, Freeman said it was too early to determine whether additional purchases made by customers in fiscal year 2017 might impact their requirements in fiscal year 2018.

    Net income for the fiscal year ended March 31 was $106.3 million, down from $109.0 million in fiscal year 2016, while operating income of $178.4 million was down $3.3 million.

    Segment operating income, which excludes non-recurring items, was $188.5 million in fiscal year 2017, up $2.4 million from that of the previous year; a rise that was primarily attributable to improved results for the company’s North America segment, partly offset by a decline for the Other Tobacco Operations segment.

    Revenues of $2.1 billion for fiscal year 2017 were said to have been ‘relatively flat’ as slightly higher volumes and a benefit from earlier receipt of distributions from unconsolidated subsidiaries were offset by lower green leaf costs and lower processing revenues.

    “I am pleased to announce that Universal delivered solid results again this year despite supply headwinds, most notably from the weather-reduced crop sizes in Brazil and ongoing challenging market conditions in Tanzania,” said Freeman.

    “Although we had anticipated ending the year with slightly lower volumes, earlier shipment timing as well as attractive green prices in some origins resulting in some additional purchases by our customers boosted shipments later in our fiscal year, allowing us to improve our market share and achieve lamina sales volumes that were slightly above those of the prior fiscal year.”

  • JT domestic volume down

    JT domestic volume down

    Japan Tobacco Inc.’s domestic cigarette sales volume during April, at 7.7 billion, was down by 3.4 percent on that of April 2016, 8.0 billion, according to preliminary figures issued by the company today. The April 2016 figure was down by 13.5 percent on that of April 2015.

    Volume during January-April, at 30.7 billion, was down by 12.6 percent on that of January-April 2016, 35.1 billion. The January-April 2016 volume was increased by 1.3 percent on that of January-April 2015.

    JT’s market share stood at 61.0 percent during April and during January-April, and at 61.1 percent during January-December 2016.

    JT’s domestic cigarette revenue during April, at ¥46.0 billion, was down by 3.1 percent on its April 2016 revenue, ¥47.5 billion, which was down by 8.8 percent on its revenue of April 2015.

    Revenue during January-April, at ¥182.4 billion, was down by 9.5 percent on that of January-April 2016, ¥201.5 billion, which was increased by 2.6 percent on its revenue of January-April 2015.

  • Results due May 23

    Results due May 23

    Universal Corporation is due to webcast a conference call after market close on May 23 following the release of its results for fiscal year 2017.

    The conference call will begin at 17.00 Eastern Time and will be hosted by Candace C. Formacek, vice president and treasurer.

    A live webcast of the conference call will be available online on a listen-only basis at www.universalcorp.com.

    A replay of the webcast conference call will be available at that site until August 3, and a taped replay of the call will be available from 20.30 on May 23 through June 5 at (855) 859-2056. The telephone replay identification number is 22767546.

  • Vapor pushing out smoke

    Vapor pushing out smoke

    Japan Tobacco Inc’s domestic cigarette volume sales during the three months to the end of March, at 23.0 billion, were 15.3 percent down on those of the three months to the end of March 2016, 27.2 billion.

    JT reported today that the volume reduction was down mainly to the overall industry decline, which was partly caused by an increase in the vapor-product category.

    ‘Core revenue declined 10.4 percent [from ¥160.6 billion to ¥143.9 billion] due to the impact from the sales volume decline partially offset by the benefit from the retail price amendment of Mevius last year,’ the company reported.

    ‘Adjusted operating profit declined 13.0 percent [from ¥65.7 billion to ¥57.2 billion] due to lower core revenue and despite benefits from cost reduction initiatives.’

    Meanwhile, Japan Tobacco International’s shipment volume during the three months to the end of March, at 91.7 billion, was down by 2.9 percent on that of the three months to the end of March 2016, 94.4 billion. At the same time GFB (global focus brands) volume fell by 0.5 percent from 66.4 billion to 66.0 billion.

    JT said that JTI’s volume decline had been caused by industry-wide contractions in some markets, market share loss in the face of competitor-driven price discounting in the Commonwealth of Independent States, and unfavorable trade inventory adjustments when compared with the situation during the first quarter of last year.

    ‘GFB shipment volume was stable but grew excluding inventory adjustments, supported by strong performance in Iran and Taiwan,’ the company said.  ‘Year-on-year total and GFB market shares increased in several key markets.

    In US dollars, JTI’s core revenue at constant currency was said to have been stable at US$2,469 million [in Yen it was down 3.1 percent from ¥284.7 billion to ¥276.0 billion] as price/mix gains in several key markets offset the volume decline impact.

    ‘Adjusted operating profit at constant currency grew 1.5 percent [in Yen it was down 7.6 percent from ¥99.5 billion to ¥92.0 billion] driven by price/mix gains and cost reduction benefits including contribution from the manufacturing footprint optimization; while investments in emerging markets and emerging products continued.

    ‘On a reported basis, core revenue and adjusted operating profit declined 1.6 percent and 6.1 percent, respectively, due to unfavorable currency movements.’

    “We are making good progress towards achieving our full year profit target,” said Mitsuomi Koizumi, JT’s president and CEO in presenting the company’s consolidated results.

    “This quarter was impacted by unfavorable comparisons due to one-off specific factors in the previous year, but our underlying business performance and financial results were in line with our expectations.

    “The international tobacco business delivered steady profit growth at constant currency, in a challenging operating environment.

    “At the same time, we reaffirmed our robust operating base in the Japanese domestic tobacco business as assumed.

    “It is encouraging that the pharmaceutical and the processed food businesses continued to contribute to the Group.

    “I’m confident that we can achieve our full year target while continuing to invest for future sustainable growth amid a continuously challenging business environment.”

  • Swedish Match sales up

    Swedish Match sales up

    Sales at Swedish Match during the first quarter to the end of March, at SEK3,775 million, were increased by six percent on those of the first quarter of 2016, SEK3,557 million, the company reported yesterday. In local currencies, sales increased by three percent.

    Operating profit from product areas (excluding larger one-off items and SM’s share of the net profit of the Scandinavian Tobacco Group [STG]) increased by six percent, from SEK939 million to SEK994 million, and in local currencies by one percent.

    Operating profit, including larger one-off items and SM’s share of the net profit of the STG, was down by 28 percent, from SEK1,711 million to SEK1,232 million. The first quarter of 2017 was said to have included larger onetime items of SEK238 million relating to the capital gains from divestment of shares in STG and sale of land. But the prior year’s first quarter included larger one-time items of SEK704 million relating to the capital gains from divestment of shares in STG and divestment of a distribution center property.

    Profit was down by 34 percent from SEK1,404 million to SEK930 million.

    Earnings per share were down from SEK7.44 to SEK5.06, while adjusted earnings per share were increased from SEK3.35 to SEK3.76.

  • RAI’s cigarette volume down

    RAI’s cigarette volume down

    Reynolds American Inc’s cigarette volume during the first quarter to the end of March, at 19.2 billion was down by 4.4 percent on that of the first quarter of last year, 20.1 billion.

    Within the total RAI volume, RJR Tobacco’s cigarette volume fell by 5.0 percent from 18.8 billion to 17.9 billion, with drive brand volume down by 4.5 percent from 17.4 billion to 16.6 billion, and ‘other’ brand volume down by 11.5 percent from 1.4 billion to 1.3 billion.

    Drive-brand volume included Newport’s 7.9 billion, down by 2.9 percent from 8.1 billion; Camel’s 4.5 billion, down by 6.0 percent from 4.8 billion; and Pall Mall’s 4.3 billion, down by 5.7 percent from 4.5 billion.

    Also within the total RAI volume, Santa Fe’s cigarette volume, comprising sales of Natural American Spirit, were increased by 5.4 percent from 1.2 billion to 1.3 billion.

    The cigarette market share of RAI’s operating companies during the quarter to the end of March, at 34.5 percent, was down by 0.1 of a percentage point on that of the first quarter of 2016.

    Newport’s share of the market was increased by 0.1 of a percentage point from 14.0 percent to 14.1 percent. Camel’s share was unchanged at 8.2 percent, while Pall Mall’s share dropped 0.2 of a percentage point to 7.7 percent.

    Natural American Spirit’s share increased by 0.2 of a percentage point to 2.3 percent.

    RAI announced also results for American Snuff, where moist snuff volume during the three months to the end of March, at 126.7 million cans, was increased by 4.4 percent on that of the first three months of last year, 121.4 million cans.

    Sales of Grizzly were increased by 4.5 percent from 111.3 million to 116.3 million cans, while sales of other brands were up by 3.6 percent from 10.0 million to 10.4 million cans.

    American Snuff’s share of the retail market was up by 1.0 percentage point to 34.5 percent, with Grizzly’s share up by 1.0 percentage point to 31.8 percent and ‘other’ brands’ share unchanged at 2.6 percent.

    RAI’s reported operating income during the first quarter of 2017, at $1,326 million, was down by 78.4 percent on that of the first quarter of last year, $6,142 million, while adjusted operating income was increased by 2.0 percent to $1,346 million.

    Reported net income was down by 78.1 percent to $780 million, while adjusted net income was up by 10.3 percent to $795 million.

    Reported net income per diluted share was down by 77.9 percent to $0.55, while adjusted net income per diluted share was increased by 12.0 percent to $0.56.

    “Reynolds American has made a strong start to the year, marked by a double-digit increase in first quarter adjusted earnings, MRTP [modified risk tobacco product] application submissions to the FDA for Camel Snus and continued progress in leading the US vapor category,” said Debra A. Crew, president and CEO of RAI, in commenting on the first-quarter results.

    “Our operating companies delivered solid performance behind their drive-brand portfolio during the quarter, and they have great strategies in place to continue this positive momentum in the year ahead…

    “R.J. Reynolds Vapor Company’s … expansion of VUSE VIBE, a high-volume cartridge and closed-tank system with a rechargeable battery, has progressed very well and VIBE is now available in more than 30,000 retail outlets in the US. The VUSE family of vapor products is the clear US market leader, and has been instrumental in RJR Vapor’s ongoing mission to redefine the vapor category.”

    RAI said that it expected the proposed acquisition of RAI by BAT, RAI’s largest shareholder, to close during the third quarter of 2017, subject to shareholder and other approvals and customary closing conditions.