MANILA, Philippines—Leading local sugar producer Roxas Holdings Inc. (RHI) posted a net profit of P668 million in the first eight months of its fiscal year ending in September, more than double its bottom line a year ago.
The company said a recent debt restructuring and other cost-containment measures boosted its cash flow to a record high.
In a statement on Monday, RHI said its net profit in the eight months to May was about 2.6 times more than the P259-million profit in the same period last year. The company’s cash flow as measured by earnings before interest, taxes, depreciation and amortization also hit a record of P1.5 billion, up from P932 million in the previous year.
“RHI has definitely turned around, thanks to our focus on cost containment and proper margin management and the continuing support of our major banks.” RHI chairman Pedro Roxas said in the statement.
The sugar company improved its profit even as its eight-month revenue dipped to P5 billion from P5.6 billion last year. Apart from reducing overhead expenses, RHI restructured P6 billion in long-term loans that were secured in 2008 for its expansion and diversification projects.
RHI originally borrowed from Banco de Oro, Bank of the Philippine Islands and Rizal Commercial Banking Corp. The loans had a tenor of 10 years with a three-year grace period.
Under the restructuring, RHI was given another three-year grace period and for the remaining four years, it has committed to pay the principal amount. As part of the restructuring, creditors agreed to shift to a floating interest rate with a one-time option to fix the term loan down the road. As such, RHI’s cost of debt servicing went down to 6.5 percent from 8.5-8.8 percent per year a few years back.
RHI president Renato Valencia explained, however, that RHI’s net income for the full fiscal year ending September might dip slightly due to the regular, major off-season repairs to be undertaken in the coming months in preparation for the coming crop year.
“We are preparing for the future, which looks promising although fraught with a lot of challenges,” Valencia added.
Sugar is a basic commodity that will continue to grow with population, with Asia accounting for 60 percent of the world’s total, Valencia said.