Makati–(PHStocks)–Listed sugar group Roxas Holdings Inc. (RHI, PSE: ROX) is already showing signs of recovery from last year’s loss when it registered a net income of PhP99 million for the first four months of its fiscal year from a net loss of PhP230 million a year ago.
Based on RHI’s unaudited financial results for October 2011 to January 2012, the company managed to turn around its financial and operating results for the period on the back of higher margins, lower manufacturing and operating expenses as well as reduced financing costs.
RHI’s improved performance is also driven by more efficient raw sugar production as a result of good cane harvest and expanded capacity of Central Azucarera de la Carlota Inc., its mill in Negros Occidental.
RHI’s revenues, on the other hand, were steady at P2.5 billion from its year-ago level of PhP2.6 billion as the company continued to benefit from the previous year’s higher refined sugar prices and sales from the export of raw sugar to Japan and South Korea.
“Our stakeholders should take comfort in the fact that last year’s loss was no more than a temporary setback. Our new management team, led by our President and Chief Executive Officer Mr. Renato C. Valencia, has put in place strategies to turn around our operations and our four‐month performance is a testament to the superiority of these strategies,” Mr. Pedro E. Roxas, RHI Chairman said.
“Apart from substantially reducing our overhead expenses, noteworthy of the steps we have taken is the restructuring of our long‐term loans we secured in 2008 to bankroll our expansion and diversification projects,” Mr. Roxas disclosed. “Our term lenders granted us another grace period of three years, which will significantly reduce our cash outflows and greatly improve our liquidity situation,” he added.
“We are aware that the situation we faced in the past year was not business as usual. But after having responded swiftly and effectively, our focus is now turned to the future,” Mr. Roxas said. “We recognize that the long term growth strategy we have carried out four years ago is still very much the right one and we are optimistic that RHI, with the help of the new management team, can achieve positive results by this year,” Mr. Roxas quipped.
Last year, RHI recorded a net loss of PhP742 million, primarily due to impairment loss incurred from selling sugar at a loss as a result of sharp fluctuations in raw sugar prices. The operational hiccups encountered at the maiden run of its bioethanol unit, Roxol Bioenergy Corporation, also dragged its profits.
Meanwhile, for the first three months of its fiscal year or from October to December 2011, RHI reported a net loss of PhP66 million, based on the company’s quarterly report filed with the Philippine Stock Exchange. This is a dramatic improvement from the PhP450 million net loss registered in the same period the previous year.
In March last year, RHI changed its fiscal year from July to June to October to September to align itself with the normal crop year of the sugar business.
In 2007, RHI launched a massive capacity expansion and diversification program to sustain its industry leadership in anticipation of the reduction of sugar tariffs from 38 percent to 5 percent levels by 2015. RHI acquired infrastructure from the United States and Australia that increased its total milling capacity to 31,000 tons cane per day from 20,000 tons cane per day.
At the same time, RHI ventured into the bioethanol space on the heels of the enactment of the Biofuels Act of 2006, which mandates local oil firms to blend 10 percent of ethanol with their gasoline. Roxol started operations last year.