Alliance One tobacco revenue in South America fell USD 121.1 million (EUR 84.6 million) in the business quarter ending 30 June, driven by declines both in price and volume.

Overall sales and other operating revenue dropped 26.4 per cent to USD 361.6 million, the company said in a statement 4 Aug.
In South America, “the decrease in volume is mainly attributable to industry changes that modified sales timing and volume by customer, while the decrease in average selling price is mainly due to lower green costs for the current crop that have been passed on to the customer. Last year's crop size was smaller than normal due to weather, and the current crop is larger than typical but a lower quality. As a result, green costs decreased even though the Brazilian Real, the primary foreign currency impacting the region, appreciated,” said the company based in Morrisville, N.C.
Operating income at USD 23.8 million in the quarter represented a drop of USD 20.6 million from the comparable quarter in 2010.
"Our results for the first quarter were consistent with our internal estimates based on global oversupply and industry changes that reduced sales to two customers following their implementation of partial vertical integration strategies. We believe that we have now largely replaced these full service volumes, but the new sales are more heavily weighted to the back half of the fiscal year, which as anticipated, impacted the first quarter compared to last year. Based on current orders for the full year, we should achieve increased volumes, revenue and improved profitability from operations versus last year,” said Chief Executive Officer Mark Kehaya. (ci)