Universal Corporation Reports 11% Revenue Growth and 24% Operating Income Increase in Q2 FY 2025

Universal Corporation reported a significant increase in financial performance for the second quarter and first half of fiscal year 2025, with revenues rising by 11% to $710.8 million and operating income increasing by 24% to $68.7 million compared to the same period last year. For the six months ended September 30, 2024, total revenues reached $1.3 billion, a 13% increase, while operating income grew by 30% to $86 million. The growth was primarily driven by strong demand in the Tobacco Operations segment, which saw a 14% increase in revenues to $630.2 million and a 48% rise in operating income to $77.3 million.

The company experienced notable changes in its financial metrics compared to the previous fiscal period. Selling, general, and administrative expenses decreased by 14% to $60 million, largely due to lower provisions for farmer advances. However, restructuring and impairment costs rose to $10.6 million, primarily related to the consolidation of European sheet tobacco operations. The effective tax rate for the quarter was 29%, up from 22% in the prior year, influenced by the mix of domestic and foreign earnings and the impact of restructuring costs.

Operationally, Universal Corporation reported a total tobacco inventory of $1.1 billion, reflecting a decrease of $15.6 million from the previous year, attributed to the timing of crop purchases and shipments. The company also noted a significant increase in accounts receivable, which rose by $168.7 million year-over-year, driven by higher sales volumes and the timing of shipments. The company’s workforce remained stable, with no significant changes in employee headcount reported.

Looking ahead, Universal Corporation anticipates continued growth in its Tobacco Operations, supported by strong customer demand and improved crop yields, particularly from Africa. The company is also optimistic about its Ingredients Operations, despite facing pricing pressures due to inflation. The newly expanded ingredients facility is expected to enhance production capabilities and contribute positively to fiscal year 2026 results. The company has initiated a new stock repurchase program, allowing for the purchase of up to $100 million in common stock through November 2026, reflecting its commitment to returning value to shareholders.