Roxas Holdings posts losses on production pains

Listed sugar and ethanol producer Roxas Holdings Inc. (RHI) reported a nine-month net loss of P652 million during its fiscal year ending in September as the industry continued to struggle with lower output and higher production costs.

It was a reversal of the previous year’s P6-million gain, albeit RHI chair Pedro Roxas has already foreseen these challenges early on.

“The sugar industry is currently faced with lower output and increasing production costs while sugar prices have remained low,” he said.

He added the changing weather patterns have triggered a shortage of cane supply, which consequently translated to higher costs due to increased competition.

Meanwhile, sugar prices remained low due to the anticipated importation of sugar.

RHI president and CEO Hubert Tubio noted the continuing challenge in sugar supply also led to a shortage in bagasse—a cheaper substitute for bunker fuel extracted from sugar canes—which is crucial for the operation of the company’s refinery.

RHI produced a significantly lower volume of refined sugar during the period at 1.1 million 50-kilogram bags from 2.2 million LKg bags from a year ago.

Tubio said the RHI group has already taken steps to face head on the same problems in the coming crop year.

RHI’s ethanol unit also posted lower margins despite the significant increase in output as costs of molasses reached a record-high of P12,500 per metric ton during the period.

RHI chief financial officer Celso Dimarucut said RHI was moving quickly to pare down its debts and manage its expenditures.

“We are now focused on reducing inventories, and collecting receivables to generate funds for capital expenditures and payment of maturing obligations,” he said.