MORRISVILLE — Alliance One International Inc., which provides tobacco to cigarette manufacturers, saw its shares rise by nearly 30 percent in pre-market trading after it disclosed plans to expand its business into e-liquids, industrial hemp and cannabis.
The Morrisville-based company believes these new products generally have higher margin potential than their core business and will play well to the company’s strengths.
“We intend to broaden our business portfolio over the next three to four years by focusing on consumer-driven agricultural products, with increased operating margins when compared to our historical leaf processing business,” said CEO Peter Sikkel in a statement. “Consistent with our commitment to growth and incremental to our core leaf earnings, our goal is to generate a significantly increasing portion of our profit from new, higher-margin businesses by 2020.”
Alliance One’s (NYSE: AOI) shares rose $3.70 to $16.80 in premarket trading on Friday morning.
January 2018, Alliance One subsidiary Canadian Cultivated Products Ltd. acquired a 75 percent stake in Canada’s Island Garden Inc. and an 80 percent stake in Goldleaf Pharm Inc.
Island Garden is one of only 35 companies fully licensed to produce and sell medicinal cannabis in Canada and has a 20,000-square-foot indoor growing facility in Charlottetown, Prince Edward Island
Goldleaf is currently completing construction of a 20,000-square-foot indoor growing facility with further expansion planned for an additional 710,000 square feet of production over a three-year period
Also, in December 2017, Alliance One subsidiary Pure-Ag NC LLC acquired a 40 percent stake in North Carolina-based Criticality LLC. Criticality grows industrial hemp in North Carolina under the state’s pilot program, which is then used for cannabidiol hemp oil extraction.
The company also reported third-quarter revenues increased 5.1 percent to $477.8 million primarily due to the larger South American crop and a 4.9 percent increase in average sales prices due to product mix.
Gross profit increased 12.8 percent to $73.5 million and gross profit as a percentage of sales improved to 15.4 percent from 14.3 percent last year.
Alliance One is an independent leaf tobacco merchant that purchases tobacco in more than 35 countries and serves manufactures of cigarettes in more than 90 countries.
The company selects, purchases, processes, packs, stores, ships, and provides expertise and financing for growing leaf tobacco.
The company’s fiscal year 2018 forecast remains unchanged with revenue forecast between $1.9 billion and $2.1 billion.
This story is from the North Carolina Business News Wire, a service of the UNC-Chapel Hill School of Media and Journalism
