Victorias Milling Corp. (VMC), one of the country’s leading sugar companies, posted a lower income for the fiscal year that ended in August 2017 at P654 million from P798 million a year ago due mainly to a big drop in sugar prices.
Compared to year-ago levels, the price of sugar in the latter part of the fiscal year fell to a low of P1,230 per 50-kilogram bags (LKG) from P1,438 and P1,805 per LKG, deeply affecting VMC’s sales.
In a disclosure to the stock market, VMC said prices were influenced by the government’s sugar importation program that led to inventory overhang. This meant its sugar inventory was kept for too long as the company was not able to find buyers, resulting in a big loss.
In addition, there is an influx of continued substitution to high-fructose corn syrup as a result of the dramatic surge in sugar prices way back in 2014.
Nonetheless, VMC’s group-wide revenue rose to P8.7 billion from P5.3 billion, boosted by revenue contributions from other business segments.
Among its core commodities, the share of raw sugar to the total was down to 17 percent, or P1.5 billion, from 63 percent, or P3.3 billion, last crop year. Tolling operations’ contribution also declined to 4 percent, or P334 million, from 15 percent, or P813 million, from a year ago.
Revenue from molasses and alcohol from distillery operations rose by 14 percent to P633 million from P554 million last year due to stable prices of alcohol and increased sales volume.
The group’s food processing segment generated revenue of P56.4 million, up from P48.6 million in 2016. This was due to the increase in sales of processed meat, pork cuts and canned meat.
Despite challenges in the market, VMC said it “retains a positive outlook on its business as demand for sugar is expected to continue to rise as a result of lower domestic prices, an expanding food processing and beverage manufacturing sector, a growing population and strong GDP growth.”
“The group has also invested significantly in projects geared toward maximizing mill productivity,” it added.