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Jun 30, 2023
Universal Corp Q1 2024 Earnings Report
Universal Corporation's first quarter of fiscal year 2024 was impacted by soft demand in the plant-based ingredients platform and high interest costs, while tobacco operations performed well.
Key Takeaways
Universal Corporation reported a net loss of $(2.1) million, or $(0.08) per diluted share, for the quarter ended June 30, 2023, compared with net income of $6.8 million, or $0.27 per diluted share, for the quarter ended June 30, 2022. Consolidated revenues increased by $87.9 million to $517.7 million for the three months ended June 30, 2023, compared to the same period in fiscal year 2023, on higher tobacco sales prices and a favorable product and geographic mix in our Tobacco Operations segment.
Tobacco operations performed well with higher segment operating income due to a favorable product and geographic mix.
Demand for leaf tobacco remains strong, with uncommitted tobacco inventory at 16% of total tobacco inventory.
The plant-based ingredients platform faced soft demand due to high customer inventory levels, leading to earnings below expectations.
Interest costs more than doubled due to higher interest rates, impacting overall profitability.
Universal Corp
Universal Corp
Universal Corp Revenue by Segment
Revenue by Segment
Tobacco Operations Revenue
CapyFin.comIngredients Operations Revenue
CapyFin.com Forward Guidance
The company believes that leaf tobacco will remain in an undersupply position. Inventory challenges in the plant-based ingredients platform are expected to be temporary.
Positive Outlook
- Demand for leaf tobacco from our customers remains strong.
- We are forecasting increased leaf tobacco production in fiscal year 2024.
- Leaf tobacco will remain in an undersupply position.
- Ongoing progress in integrating plant-based ingredients platform.
- Excess inventory levels held by our customers to eventually work down.
Challenges Ahead
- Soft demand in the plant-based ingredients platform due to high customer inventory levels.
- Earnings for the plant-based ingredients platform were below expectations.
- Expansion of the plant-based ingredients platform’s capabilities has added to our costs.
- Sharp drop in certain new crop raw material prices resulted in inventory write-downs.
- Costs, notably interest costs and prices for green leaf tobacco, remained high.
Revenue & Expenses
Visualization of income flow from segment revenue to net income