Roxas Holdings net profit as of March rises 29%

Leading sugar producer Roxas Holdings Inc. (RHI) grew its net profit in the six-month period ending March by 29 percent year on year to P332 million as cost controls as well as improved margins and debt profile offset lower revenues arising from sharply lower sugar prices.

RHI chairman Pedro Roxas disclosed to the Philippine Stock Exchange on Monday that the company’s cash flow based on earnings before interest, taxes, depreciation and amortization for the first half of its fiscal year—which ends in September—reached nearly P1 billion, a major improvement relative to previous levels.

“Our efforts to contain costs and manage our margins are beginning to bear fruit,” he said.

Revenues dipped to P3.5 billion in the six-month period compared to P4 billion in the comparative level, primarily due to a sharp drop in the selling prices of sugar.

But RHI president Renato Valencia noted that the company was rightsizing, restructuring its business segments and streamlining its operations to prepare for the reduction of tariff on sugar imports from 38 percent to 5 percent in 2015, as well as a possible regime of low sugar prices in the coming years.

“We have restructured our term loans and secured three years’ grace period on principal amortization to give us time to accumulate enough cash to pay down these loans in the coming years,” he added.

Valencia also said the company was trying not only to bring down its overhead and interest burden, but also its production costs.

“For this purpose, the company recently hired a foreign expert to do a technical audit of our sugar milling and refinery operations,” he said.

The company’s massive cost-containment measures brought down its cost of sales by 25 percent to P2.5 billion from last year’s P3.3 billion.

“The bulk of our cost of sales comes from energy cost. To address this, our plants now primarily run using bagasse as a cheaper and cleaner alternative to bunker fuel,” Valencia explained.

“It is also worth noting that the improvements we have made in our operations and in cash management substantially reduced our debt level by P2 billion since last year,” Valencia disclosed.

“We expect to sustain the momentum and deliver positive results to our shareholders by yearend,” he said.—Doris C. Dumlao