Universal Corp. (UVV) Reports Q4 EPS of $1.08

Universal Corp. (NYSE: UVV) reported Q4 EPS of $1.08, versus $1.26 reported last year. Revenue for the quarter came in at $632.09 million, versus $671.72 million reported last year.

Mr. Freeman stated, "We could not have predicted that we would be closing out our fiscal year in the throes of a global pandemic. Our thoughts are with all those who have been and continue to be affected by this unprecedented event, and our thanks go out to all who are providing essential services to our communities. I am especially grateful to our many employees worldwide who make it possible for us to continue to operate under challenging conditions and within the guidelines of authorities, to meet the needs of our valued customers. Our first priority is the health and safety of our employees, and we appreciate their willingness to adopt new protocols that we believe will help protect the safety and health of our employees, their families, and the communities in which we operate.

"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. These currency weaknesses were the primary drivers for unfavorable currency comparisons, mainly attributable to remeasurement, of $21 million and $13 million for the quarter and year ended March 31, 2020, respectively. Towards the end of our fiscal year, we also saw some shipment delays in certain regions due to the COVID-19 pandemic and slower customer orders, which increased our uncommitted inventory levels. In addition, as we have discussed throughout the fiscal year, our results for fiscal year 2020 have been negatively impacted by lower carryover volumes compared to fiscal year 2019, mainly in North America and Africa. Our gross margins for fiscal year 2020, however, remained relatively flat compared to fiscal year 2019.

"As we move into fiscal year 2021, we are forecasting that global flue-cured and burley tobacco production will decline by about 7% and 10%, respectively, which we believe will keep flue-cured tobacco in a slight oversupply position and burley will remain in a balanced supply position. We are closely monitoring the impacts of COVID-19 in all of our operations around the world. Business activity during the first fiscal quarter is usually lower than in other quarters, as crop purchases are continuing in Brazil and just beginning in Africa. To date we have not seen a material impact to our supply chain or seasonal planting or harvesting requirements, however, we have experienced increased volatility in foreign currency exchange rates, which we believe is related to the uncertainties from COVID-19. In some regions, our processing facilities temporarily experienced partial or total closures. Nearly all operations have resumed, and we have instituted measures to protect our employees including reduced staffing and social distancing. We have experienced slower processing due to social distancing requirements, which may delay shipments of packed orders. We have also taken steps at this time to conserve our liquidity position, including limiting most discretionary spending and non-essential capital spending.

"We are continuing to position our company for success. As part of our capital allocation strategy, we made disciplined investments in both tobacco and non-tobacco businesses that we believe will be able to deliver shareholder value. Recognizing the strong demand for natural tobacco wrappers, we have taken steps to increase production in strategic regions to meet our customers' ongoing and future demands. Our acquisition of FruitSmart Inc. in January 2020 represents a foundational step in building out a broader plant-based agri-products services platform for which we maintain an active investment pipeline. At the same time, we are focused on prudently managing our financial position and believe that we are well positioned to fund upcoming working capital needs, including any potential requirements due to the COVID-19 pandemic, and to take advantage of investment opportunities in our tobacco business. We are also extremely proud that we are able to deliver value to shareholders through dividend increases as illustrated by our milestone 50th annual dividend increase announced today."

For earnings history and earnings-related data on Universal Corp. (UVV) click here.

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