Tag: International

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.”
June 15, 2017
BAT glowing in Japan
British American Tobacco said today that the performance of its heated-tobacco product, glo, in Sendai, Japan, was continuing to exceed its expectations.
Presenting its First Half Pre-Close Trading Update 2017, the company added that it was on track for further ‘Japanese and international rollout in the second half’.
‘In vapor, our share growth in Western Europe continues and we are making encouraging progress with the rollout of Vype Pebble,’ BAT said in a note posted on its website.
‘A city test of Vype e-Pen III is on track for Q4.’
Meanwhile, the company said that, as highlighted in February, its first-half volumes were ‘lapping a strong prior year comparator’ and would be impacted by the phasing of shipments in some key markets, including Pakistan.
‘Full year volume is expected to outperform the industry, which we anticipate will be down around four percent,’ the company said.
‘We expect our market share to continue to grow, driven by the GDBs [global drive brands].
‘Trading in our key markets continues to reflect the trends discussed at the preliminary results in February with Canada, Romania, Bangladesh and Ukraine performing well and conditions remaining challenging in Brazil, South Africa, Malaysia, France and the UK.’
BAT said that its first-half revenue was expected to benefit from good pricing.
‘As previously stated, profit growth is expected to be weighted to the second half of the year, mainly due to the timing of volume shipments, as well as the phasing of NGP [new generation product] investments and marketing spend,’ the company said.
‘If exchange rates stayed the same for the remainder of the year, there would be an adverse transactional impact on operating profit of two percent for both the first half and the full year. For translation, this would be a tailwind on operating profit of approximately 13 percent for the half year and seven percent for the full year.
‘First half EPS is expected to benefit from a significant translational foreign exchange tailwind of around 14 percent.’
June 14, 2017
Registration open
The Tax-Free World Association (TFWA) has opened registration for its new exhibition, the TFWA Digital Village.
TFWA Digital Village is scheduled to run alongside the TFWA World Exhibition & Conference, which is due to be held at the Palais des Festivals, Cannes, France, on October 1-6.
It will start with an opening cocktail reception at Hotel Barrière Le Majestic on October 3 and run until October 6. It will be held in the Gare Maritime, an exhibition area beside the Palais des Festivals.
Among the speakers at the conference on October 2 will be David Rowan, editor-at-large of the technology and trends magazine WIRED UK, who will describe how the advance of technology will impact the duty free and travel retail industry.
TFWA Digital Village will feature TFWA’s ONE2ONE meeting service, a personalised appointment service that provides opportunities for exhibitors to meet with decision makers and senior executives keen to embrace new technology.
“To thrive in this digital age, the duty free and travel retail industry needs to embrace digital technology,” Erik Juul-Mortensen, president of TFWA was quoted as saying in a press note issued by the TFWA.
“As the industry celebrates its 70th anniversary, this new venture will help to keep our business on track to move forward in a technology-centric world, and will allow brands and retailers to find out more about the leading players in this important field.
“Similarly, the duty free and travel retail industry, valued at US$63.6 billion in 2016 by research commissioned by TFWA, is a market of enormous potential for innovative technology providers, making this the perfect platform to forge partnerships that will benefit both parties.”
More information about the TFWA Digital Village is at: http://www.tfwa.com.
June 13, 2017
Snus not appreciated
In a piece published by Bloomberg, Joe Nocera has described as ‘truly maddening’ the fact that most countries refuse to acknowledge the reduced-harm potential of Swedish snus.
Nocera starts his piece with the ‘astonishing’ fact that the number of daily smokers in Sweden is five percent, when the medical journal, The Lancet, defines as ‘tobacco-free’ a country with a smoking rate of lower than five percent.
He traces the massive switch that has seen Swedish smokers turn to snus and the almost-total risk-reduction that that has implied. When smokers were offered a nicotine fix without the carcinogens that came with smoking those smokers embraced that solution, he said.
What was truly maddening was that despite the powerful evidence provided by Sweden, most countries refused to acknowledge it.
‘Most tobacco-control advocates in the West continue to push the idea that quitting all forms of tobacco and nicotine is the safest policy – which is true, though it is a classic example of the perfect being the enemy of the good,’ he said.
‘And they continue to harbor a deep suspicion of alternative nicotine products.
‘Their understandable animus towards Big Tobacco has clouded their ability to see that replacing one kind of tobacco product (combustible cigarettes) with another (snus) can save lives.’
Nocera’s piece is at: https://www.bloomberg.com/view/articles/2017-06-08/sweden-figured-out-how-to-stop-people-from-smoking.
June 12, 2017
JT on sustainability
The JT Group today published its 2016 Sustainability Report, which is said to highlight the key contribution of Japan Tobacco International, its international tobacco business, in achieving the group’s sustainability objectives.
‘The report is compiled in accordance with the “Core” Level of the GRI [Global Reporting Initiative] G4 Sustainability Reporting Guidelines, showing the JT Group’s commitment to being transparent in its sustainability performance,’ according to a note posted on the JTI website.
JTI said that as part of its sustainability program it had brought 9,742 more children into schools in tobacco growing countries. ‘This is part of the company’s commitment to building sustainable economies in tobacco growing communities where we directly and indirectly purchase tobacco, through dedicated programs improving their economic, social and environmental conditions,’ the note said.
In addition, JTI said, it had deployed more than 300 community investment programs in more than 60 countries. ‘JTI’s programs vary from the support to women in creating micro-enterprises in South Sudan to providing access to art for disabled adults in Italy,’ it said. ‘Many of the company’s programs involve the active participation of employees. In the United Kingdom, JTI continues to be one of only 34 holders of the CommunityMark for excellence in community investment.’
And the company said it had been recognized as a Global Top Employer for the third consecutive year, ‘a testimony of the company’s consistent high-quality work environment and commitment to providing exceptional development opportunities to employees worldwide’.
“Over the past year, we have made significant progress in delivering on our commitments to promoting sustainability both for the wider society and for the whole Group”, says Maarten Bevers, JTI’s corporate social responsibility vice president.
“We set ourselves high standards and we are honored that our work is being recognized in various areas. Our long-term approach and determination to uphold rigorous business practices – from our support to tobacco growing communities to the work environment we offer our employees – is reflected in this report.”
JTI said that the challenges it had tackled ranged from the elimination of child labor to respecting workers’ rights, maintaining adequate health and safety conditions, and providing access to water and sanitation, and reforestation.
‘For the first time in 2016, the JT Group was recognized as one of the world’s best climate change reporters by being included on the CDP’s Climate A List, the JTI note said. ‘It was also selected as a member of the Dow Jones Sustainability Asia/Pacific Index for the third consecutive year.’
“As a global business, we have a responsibility to operate and manage our resources sustainably,” said Bevers. “We do this with the aim to deliver value to the JT Group’s wide range of stakeholders – consumers, shareholders, employees and the wider society, including the communities in which we operate.”
May 26, 2017
New ways sought at WHO
Japan Tobacco International has urged the new leader of the World Health Organization, the former Ethiopian health minister Dr. Tedros Adhanom Ghebreyesus, to scrutinize carefully the organization’s current practices.
In a note posted on its website today, JTI said the World Health Assembly had just appointed the WHO’s new director general, amid controversy around the UN agency’s practices.
‘JTI has witnessed a number of abuses over the past years that are putting at risk three fundamental areas where businesses play a key role: transparency, sustainability and innovation,’ the note said. ‘We trust that current practices will be carefully scrutinized by the new WHO lead.’
On the question of transparency, JTI said that a culture of censorship and exclusion had developed, notably at the most recent Conference of the Parties to WHO’s Framework Convention on Tobacco Control (FCTC), where ostensibly open debates were held behind closed doors, from which journalists and the public were expelled, in direct contravention of the United Nation’s fundamental principles.
‘Any individual or organization who is seen to consult with anyone in the tobacco sector, including government representatives and experts with legitimate credentials, is in the WHO’s line of sight,’ the note said. ‘The WHO has so abused these practices that it is now putting pressure on other organizations, notably UN agencies, to follow the same dogmatic approach. It is therefore no surprise that the three WHO candidates have made transparency a key theme of their campaign. We expect the new director general to terminate this culture of secrecy.’
Turning to the question of sustainability, JTI said it was regrettable that the current WHO leadership had a narrow vision of the developing world’s realities. ‘Bullying tobacco farmers and governments to blindly follow its exclusion tactics, the WHO has been dangerously jeopardizing many programs which enhance tobacco communities’ livelihoods and meet the United Nation’s Sustainable Development Goals,’ the note said. ‘This includes Public Private Partnerships that have delivered concrete results which can only be achieved through sustained and collaborative efforts.
‘Conversely, if companies didn’t take their responsibility towards society seriously, the same organization would no doubt point fingers at them. It is crucial for the new WHO regime to acknowledge the invaluable expertise, resources and rigor that legitimate companies can and should continue to provide to communities where they are established.’
On the question of innovation, JTI said the WHO’s FCTC continued to recommend the prohibition or restriction of electronic cigarettes, even though these products did not contain tobacco and had the potential to reduce health risks. The company said it was looking forward to a new direction at the WHO that encouraged innovation and choice through research and development instead of ‘sliding into a contagious trend of product bans’.
“The WHO has become ideology-driven, engaging in a fight against businesses, tobacco growers, and vapers when it should open itself up to scrutiny and see the merit of initiatives that are actually delivering results, no matter what individual positions are,” JTI’s corporate communications vice president, Michelle McKeown, was quoted as saying.
“We trust the new WHO director general will take this opportunity to get back to basics by tackling the issue of transparency, keeping an objective view of sustainability in the developing world, and accepting that the innovation of next-generation products can help address some of the organization’s concerns.”
May 24, 2017
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.”
May 24, 2017
Deadline extended
CORESTA has extended by a week the deadline for the submission of abstracts of papers intended for presentation at its 2017 Joint Study Group meetings.
The deadline is now May 26.
The Smoke Science and Product Technology (SSPT) meeting is due to be held at Kitzbühel, Austria, on October 8-12.
And the Agronomy & Leaf Integrity and Phytopathology & Genetics meeting is scheduled to be held at Santa Cruz do Sul, Brazil, on October 22-26.
The invitation for abstract submissions is being made through the CORESTA website at www.coresta.org.
SSPT abstracts can be submitted directly at: www.sspt2017.org.
CORESTA said that authors would receive immediately an e-mail message confirming the successful submission of their abstracts.
They would be informed of the CORESTA Reading Committee’s selection towards the end of June.
May 24, 2017
Another move in end game
The Danish Institute of Human Rights (DIHR) has said that the UN Guiding Principles on Business and Human Rights (UNGPs) require the tobacco industry to stop the production and marketing of tobacco products.
In a note posted on its website, the DIHR said the United Nations Human Rights Council had endorsed the UNGPs, which applied to all companies including tobacco companies.
‘The Human Rights Council has expressed its authoritative expectation that all companies exercise due diligence in the efforts to respect human rights,’ the note said.
‘According to the UNGPs companies should avoid causing or contributing to adverse impacts on human rights. Where such impacts occur, companies should immediately cease the actions that cause or contribute to the impacts.
‘Tobacco is deeply harmful to human health, and there can be no doubt that the production and marketing of tobacco is irreconcilable with the human right to health.
‘For the tobacco industry, the UNGPs therefore require the cessation of the production and marketing of tobacco.’
The issue has come to a head because, in September, the DIHR began work on a human rights assessment of Philip Morris International.
The DIHR said that work had been completed and that it had decided to end its engagement with PMI.
The DIHR note, which explains the purpose of its engagement with PMI, is at: https://www.humanrights.dk/news/human-rights-assessment-philip-morris-international.
May 24, 2017
Interested in water pipes?
The CORESTA Board is carrying out a survey to evaluate what level of interest exists in carrying out a scientific investigation into water pipe tobacco and its emissions during consumption.
In a press note issued on Friday, CORESTA said that until the 20th century, water pipe smoking was a part of the Asian and Northern African cultures.
‘Since then, this type of smoking has spread in Europe and Northern America, becoming more and more trendy worldwide,’ the press note said.
‘Whatever the name given to the device – hookah, shisha, nargile – the general perception of such smoking is that since tobacco is not burnt, but heated, and the smoke filtered through water, it is less harmful.
‘However, to date, very little scientific work has been produced on either the tobacco mixture itself or the emissions.
‘Work started at ISO level in 2010 was stopped in 2016 without a significant output due to the lack of resources.
‘The CORESTA Board considered that water pipe users deserve robust scientific facts about their products and is launching a survey to evaluate interest in such research.’
The survey form, which should be completed before June 16, can be found at: coresta.org.
May 15, 2017