Universal Corporation (UVV)
Interest coverage
| Mar 31, 2025 | Dec 31, 2024 | Sep 30, 2024 | Jun 30, 2024 | Mar 31, 2024 | Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) (ttm) | US$ in thousands | 59,064 | 94,632 | 188,975 | 258,929 | 252,030 | 238,219 | 220,724 | 188,822 | 188,367 | 184,829 | 171,193 | 163,986 | 162,168 | 164,971 | 161,630 | 147,807 | 147,004 | 118,286 | 103,431 | 133,350 |
| Interest expense (ttm) | US$ in thousands | 81,015 | 79,462 | 75,684 | 71,464 | 66,273 | 64,162 | 62,902 | 58,119 | 49,300 | 40,206 | 33,403 | 28,263 | 27,747 | 26,614 | 25,887 | 24,352 | 24,954 | 24,633 | 23,095 | 22,636 |
| Interest coverage | 0.73 | 1.19 | 2.50 | 3.62 | 3.80 | 3.71 | 3.51 | 3.25 | 3.82 | 4.60 | 5.13 | 5.80 | 5.84 | 6.20 | 6.24 | 6.07 | 5.89 | 4.80 | 4.48 | 5.89 |
March 31, 2025 calculation
Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $59,064K ÷ $81,015K
= 0.73
The interest coverage ratio for Universal Corporation has shown a declining trend over the period from June 30, 2020, to March 31, 2025. The ratio started at a relatively healthy level of 5.89 on June 30, 2020, indicating that the company's operating income was almost six times its interest expenses, which is considered adequate.
However, the interest coverage ratio deteriorated over the subsequent quarters, with a significant drop to 1.19 on December 31, 2024, and further declining to 0.73 on March 31, 2025. This indicates a concerning situation where the company's operating income may not be sufficient to cover its interest expenses.
A low interest coverage ratio suggests that Universal Corporation may be struggling to meet its interest obligations using its operating income alone. It could imply potential financial distress or a higher risk of default on its debt payments.
Management and stakeholders should closely monitor the trend in the interest coverage ratio and take necessary actions to improve the company's financial health, such as cost-cutting measures, revenue enhancement strategies, or refinancing options to reduce interest expenses.
Peer comparison
Mar 31, 2025