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Mar 31, 2020
Universal Corp Q4 2020 Earnings Report
Universal Corporation's financial performance declined in Q4 2020 due to lower sales volumes and the impact of the COVID-19 pandemic.
Key Takeaways
Universal Corporation reported a decrease in net income and operating income for the fourth quarter of fiscal year 2020, compared to the same period in the prior year. The decline was attributed to lower sales volumes, unfavorable currency comparisons, and the impact of the COVID-19 pandemic.
Net income decreased to $15.6 million, or $0.63 per diluted share, compared to $31.4 million, or $1.24 per diluted share, in the prior year's fourth fiscal quarter.
Operating income decreased to $31.5 million compared to $60.7 million for the three months ended March 31, 2019.
Consolidated revenues decreased by $39.6 million to $632.1 million compared to the same period in fiscal year 2019, on lower sales volumes and prices.
Uncertain market conditions, mainly driven by the ongoing COVID-19 pandemic, led to extreme weakening of the Indonesian rupiah, Brazilian real, and Mexican peso relative to the U.S. dollar, all of which experienced double-digit depreciation during the month of March.
Forward Guidance
Universal Corporation is forecasting a decline in global flue-cured and burley tobacco production and is closely monitoring the impacts of COVID-19.
Positive Outlook
- Global flue-cured and burley tobacco production will decline by about 7% and 10%, respectively.
- Flue-cured tobacco will be in a slight oversupply position.
- Burley will remain in a balanced supply position.
- The company has taken steps to increase production in strategic regions to meet customers’ demands for natural tobacco wrappers.
- Universal Corporation believes they are well positioned to fund upcoming working capital needs and to take advantage of investment opportunities in the tobacco business.
Challenges Ahead
- Increased volatility in foreign currency exchange rates is expected during fiscal year 2021.
- Shipment delays and slower processing due to social distancing requirements may occur.
- The company experienced slower processing due to social distancing requirements, which may delay shipments of packed orders.
Historical Earnings Impact
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Avg. Return Before/After Earnings
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