Universal Corp. (NYSE:UVV) reported a sharp decline in third-quarter earnings Monday, as the global leaf tobacco merchant grappled with lower shipment volumes and a shifting supply landscape that has moved from scarcity to a potential market glut.
The Richmond, Virginia-based company posted net income of $33.2 million, or $1.32 per share, for the fiscal quarter ended Dec. 31, 2025—a 44% drop from the $59.6 million reported in the same period last year.
Revenue fell 8% to $861.3 million, missing Wall Street estimates as the company navigated oversupply in several tobacco styles and higher inventory write-downs.
When adjusted for restructuring costs, earnings stood at $1.35 per share, falling well short of the $1.94 consensus estimate.
Despite the headwinds in its core tobacco segment, Universal saw a 7% year-to-date revenue increase in its Ingredients Operations, a key pillar of its diversification strategy into plant-based extracts.
However, margins in that segment remained under pressure due to higher fixed costs at recently expanded facilities and soft consumer demand.
"Our tobacco operations continued to deliver solid results, but we are mindful of evolving market dynamics," said CEO Preston D. Wigner, noting that crop sizes outside China have increased by 20% to 30%, signaling a transition to a more balanced or oversupplied market.