Universal Corp (UVV) Reports 30% Increase in Operating Income for H1 FY2024
Operating income for H1 FY2024 up by 30% compared to H1 FY2023.
Gross profit margins rebounded in H1 FY2024, with ingredients companies making a positive contribution.
Tobacco Operations segment delivered strong performance in H1 FY2024 due to robust demand for leaf tobacco.
Net debt levels declined by about $70 million compared to September 30, 2022.
Universal Corp (NYSE:UVV) released its earnings report on November 2, 2023, revealing a strong performance for the first half of fiscal year 2024. The company's operating income for the six months ended September 30, 2023, was up 30% compared to the same period in the previous year. This was largely driven by robust demand for leaf tobacco and a favorable product mix.
Financial Highlights
Universal Corp (NYSE:UVV) reported sales and other operating revenue of $1,156.2 million, a 7% increase from $1,080.8 million in H1 FY2023. The cost of goods sold was $938.0 million, a 5% increase from $890.8 million in the same period last year. Despite this, the company's gross profit margin improved to 18.9% from 17.6% in H1 FY2023.
Operating income for H1 FY2024 was $66.3 million, a 30% increase from $51.2 million in H1 FY2023. However, diluted earnings per share decreased by 10% to $1.04 from $1.15 in the same period last year. The company's Tobacco Operations segment reported sales and other operating revenues of $998.6 million, a 9% increase from $918.1 million in H1 FY2023. The segment's operating income was $61.3 million, a significant 46% increase from $41.9 million in H1 FY2023.
Company Performance and Future Outlook
Universal Corp (NYSE:UVV) attributed its strong performance to robust demand for leaf tobacco and a favorable product mix. The company's Tobacco Operations segment saw improved margins in H1 FY2024, despite lower leaf tobacco sales volumes. The company also reported that its uncommitted tobacco inventory level remained low at 12% as of September 30, 2023, and expects it to remain low for the rest of FY2024.
Despite challenges in the Ingredients Operations segment, the company remains optimistic about its future performance. The company believes that its ongoing investments in its ingredients platform, coupled with its commercial and research and development efforts, will strengthen its business for the future.
Universal Corp (NYSE:UVV) also highlighted its commitment to environmental sustainability, demonstrating this through supplier engagement and disclosures on climate change, water stewardship, and forestry. The company has approved a Water Stewardship policy to guide and publicly commit to water stewardship through its global operations.
Explore the complete 8-K earnings release (here) from Universal Corp for further details.
This article first appeared on GuruFocus.
