Roxas Holdings: Shuttered Luzon sugar mill may still be revived

Listed sugar and ethanol producer Roxas Holdings Inc. (RHI) hinted at reviving its sugar business in Batangas province sometime in the future if a “viable business opportunity” arises.

RHI does not expect regular operations of Central Azucarera Don Pedro Inc. (Cadpi) to resume “in the near term” and it is “unable to provide a timetable for any plan or activity involving Cadpi under its current circumstances.”

However, “Cadpi will safekeep and preserve the refinery plant and related assets until there arises a viable business opportunity that will warrant resumption of operations,” the company said in a disclosure on Friday.

RHI permanently ceased the operations of the plant in Nasugbu town last Feb. 28 due to “serious business losses,” subsequently terminating all its employees a month later, on March 29.

READ: Huge losses force Luzon sugar mill to close shop

Cadpi took a hit from a slew of factors, including dwindling sugarcane supply, an aging and oversized mill equipment, and increased importation of refined sugar by the government in the past years.

It said the Sugar Regulatory Administration had informed them they could sell refined sugar to the public again once current inventories in the market have been depleted.

Dent on profitability

Seeing an opportunity to focus on sugar refining, RHI first closed Cadpi’s sugar milling operations in December 2022. Gokongwei-led food and beverage giant Universal Robina Corp. eventually acquired Cadpi’s sugar milling machinery and equipment.

However, the termination of its milling operations took a toll on RHI’s profitability in the fiscal year ending September 2023. It sustained a net loss of P2.3 billion, wider by 187.9 percent from P797.01 million in the previous period, while revenues declined by 19.8 percent to P4.2 billion.

READ: Refinery woes inflate Roxas Holdings’ losses

To spur liquidity, RHI said it was “currently reviewing other options including potentially inviting new investors that will allow RHI to operate again.” It said it was also “considering” the disposal of its non-core assets.

RHI is divesting its shares in San Carlos Bioenergy Inc. (SCBI), which ran an ethanol plant in Negros Occidental until operations were discontinued in November last year because of the decreasing quality of molasses and cashflow issues.

“RHI is presently in earnest discussion with a prospective buyer of SCBI. Discussions continue “and no definitive agreement has yet been reached pertinent to the sale at this time,” it said.

The deal—which would cover SCBI assets and its operations (as a separate segment of RHI’s business)—is expected to be completed within the second or third quarter of this year. Both have been classified as “assets held for sale.”