RHI’s Nine-Month Losses Widened Amid Challenges in the Philippine Sugar Industry

Listed sugar and ethanol producer Roxas Holdings Inc. (PSE: ROX) today reported nine-month net loss amounting to PhP652 million from a net income of PhP6 million for the same period last year.

“The sugar industry is currently faced with lower output and increasing production costs while sugar prices have remained low,” said RHI Chairman Pedro E. Roxas.

Roxas said that the changing weather conditions experienced have triggered a shortage of cane supply, which consequently translated to higher cost of cane because of increased competition. Sugar prices remained low due to the anticipated importation of sugar.

RHI President and CEO Hubert D. Tubio said the continuing challenge with sugarcane supply also led to a shortage in bagasse that is crucial for the operation of the Refinery. “RHI produced a significantly lower volume of refined sugar from 2.2 million LKg bags last crop year to 1.1 million LKg bags this crop year,” Tubio explained. “The group has taken steps to avoid a similar problem in the coming crop year.”

The Chief Executive also took note of the impact of high feedstock cost on RHI’s ethanol business. “Our ethanol unit posted lower margins despite the substantial increase in production as costs of molasses reached an all-time high of PhP12,500 per metric ton during the period,” Tubio explained.

Meanwhile, RHI Executive Vice-President and Chief Finance Officer Celso T. Dimarucut said that the Group’s revenues increased to PhP12 billion (including revenue from discontinued operations amounting to PhP5.5 billion) during the third quarter, attributable to higher sales volume and price of alcohol, as well as milling revenues recognized, amounting to PhP2.5 billion following the adoption of the Philippine Financial Reporting Standard (PFRS) 15 or ‘Revenue Recognition’.

He said the group is moving quickly to pare down its debts and manage its expenditures. “We are now focused on reducing inventories, and collecting receivables to generate funds for capital expenditures and payment of maturing obligations,” Dimarucut said.