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P.O. Box 25099 Richmond, VA 23260 o phone: (804) 359-9311 o fax (804) 254-3594
PRESS RELEASE
CONTACT RELEASE
Karen M. L. Whelan Immediately
Phone: (804) 359-9311
Fax: (804) 254-3594
Email: investor@universalleaf.com
Universal Corporation Announces Earnings Expectations
Richmond, VA, September 27, 2001 / PRNEWSWIRE
Henry H. Harrell, Chairman and Chief Executive Officer of Universal
Corporation, announced that the company expects to report higher earnings for
its first fiscal quarter, which ends on September 30, 2001. Earnings for the
quarter are expected to be about 10% higher than those of the first quarter last
year. The expected improvement is primarily due to increased shipment volumes,
some of which represented delays from prior year crops.
Despite the strong quarter, management believes that, because of a
number of developing factors, the company will report lower income for the
fiscal year as a whole. Although the company has taken steps to reduce its U.S.
cost structure, that market is still in transition between an auction market and
direct contracting. The company is experiencing cost increases as it
participates in both systems, and average grower prices have risen as well.
Recovery of increased costs is more difficult this year because the price of
U.S. tobacco continues to be uncompetitive in world markets and the change to
direct contracting has increased market risk for leaf dealers. Rising medical
costs have also adversely affected U.S. operations. Smaller crops in several
areas, notably Brazil, Zimbabwe, Malawi, and Poland, are also expected to cause
some earnings shortfalls compared to last year. The continuing political
instability and the significant increase in tobacco cost in Zimbabwe has reduced
the attractiveness of that crop. In addition, although the company could see
some benefits from the strengthening euro, if European economies weaken further,
the performance of its lumber business could be affected later in the year.
Mr. Harrell said, "The company's U.S. operations are aggressively
dealing with increased costs and inefficiencies associated with this period of
change in the domestic marketplace. In addition, although smaller crops in key
regions should improve world market balance over the longer term, they will
reduce our volumes in the near term. Nonetheless, our strategy is sound, and we
believe that we will have a good performance in this transition period. We
currently expect net income to be approximately $100 million in fiscal year
2002."
The company will webcast a conference call concerning this press
release at 9:00 a.m. Eastern Time on September 28, 2001. Mr. Harrell will make
some remarks and will be available for questions.
A live webcast of the conference call will be available online on a
listen-only basis at www.universalcorp.com. A replay of the webcast conference
call will be available at that site for seven days. A taped replay of the call
will also be available for seven days beginning 11:30 a.m. Eastern Time on
September 28 at 888-203-1112. The conference replay pass code is 709419.
All remarks made during the conference call will be current at the
time of the call and will not be updated to reflect subsequent material
developments. While news media representatives will not be able to ask questions
during the webcast, they are welcome to monitor the remarks on a listen-only
basis. The media's use of any comments made by Universal employees during the
call will be restricted for background use only and not for attribution.
Rebroadcast of the copyrighted call or any portion thereof is prohibited.
Universal Corporation (UVV:NYSE) is a diversified company with
operations in tobacco, lumber, and agri-products. Its gross revenues for the
fiscal year that ended on June 30, 2001, were approximately $3 billion. The
company cautions readers that any forward-looking statements contained herein
are based upon management's current knowledge and assumptions about future
events, including anticipated levels of demand for and supply of the company's
products and services, costs incurred in providing these products and services,
timing of shipments to customers, and general economic, political, market, and
weather conditions. Lumber and building products earnings are also affected by
changes in exchange rates between the U.S. dollar and the euro. Actual results,
therefore, could vary from those expected. For more details on factors that
could affect expectations, see the Management's Discussion and Analysis section
of the company's Annual Report on Form 10-K for the year ended June 30, 2001, as
filed with the Securities and Exchange Commission. For more information, visit
Universal's web site at www.universalcorp.com.