LISTED sugar refiner Roxas Holdings Inc. (RHI) said its output for fiscal year (FY) 2017-2018 could decline by as much as 10 percent, but company officials expressed confidence that this would not cut RHI’s earnings.
“The [Sugar Regulatory Administration] has already done surveys and data from sugar mills in the country [showed that] there’s a decrease in the volume of production nationwide of around of 8 [percent] to 10 percent,” RHI President and CEO Hubert D. Tubio told reporters after the group’s annual stakeholders’ meeting on Wednesday.
“We are looking at the same rate of decline for our Negros operations. There could be a drop in output of 8 [percent] to 10 percent,” Tubio added.
Based on their latest estimates, he said total sugarcane milled by its Negros unit, Central Azucarera de la Carlota Inc., would reach at least 1.8 million metric tons (MMT) at the end of the current FY, while its Central Azucarera Don Pedro Inc. in Batangas would have a total milling tonnage of about 1.35 MMT.
Based on the computation of the BusinessMirror, RHI’s total milling tonnage for the current fiscal year ending September 30 would hit at least 3.1 MMT, or 10.43 percent lower than the 3.461 MMT recorded in FY 2016-2017.
RHI CFO Celso T. Dimarucut said bulk of their sugar output last year, or about 2.1 MMT, came from their Negros operations, while the remaining volume of about 1.3 million was produced in Batangas.
Furthermore, Tubio said they expect the group’s average sugarcane milling-recovery rate to drop to 1.85 50-kilogram bags per ton of cane (Lkg/TC) from the previous year’s average of 1.9 Lkg/TC.
“We will still try to beat our projections in terms of numbers, not necessarily in terms of tonnage and liters, but in terms of our target for our bottom line,” he said.
Despite the reduction in production, Tubio said they remain optimistic to reach their net income target for 2018 due to the current high prices of sugar in the domestic market.
“[Sugar] prices have started to go up to P1,660 per Lkg, that would at least offset the reduction in our volume,” he added.
Dimarucut said its sugar mills’ high initial inventory at the start of FY of about 400,000 Lkg would compensate for projected cut in output.
For the current fiscal year, RHI is targeting P1.6 billion in earnings before interest, taxes, depreciation and amortization (Ebitda).
“We anticipate that we will exeed [the target] a bit. The excess sugar in last year’s production will compensate the cut in output this year,” he added.
Dimarucut also said the company’s bottom line at the end of FY 2017-2018 could reach some P120 million.
“If we hit the same level of Ebitda, more or less our profit levels would be along that line, as well,” he said. “We are expecting at the very minimum is relatively flat due to the environment changes. But we are hopeful that due to some improvements, we will surpass our net income last year.”