Integrated sugar and ethanol producer Roxas Holdings Inc. expects a flat net income this year as higher sugar prices will be tempered by a 10-percent decline in production.
RHI president Hubert Tubio said in an interview after the annual stockholders’ meeting sugar production would likely drop 8 percent to 10 percent this year from 3.46 million tons of cane on adverse weather conditions.
Tubio, however, said the production would be boosted by 400,000 bags of sugar inventory at the beginning of the fiscal year.
Sugar prices are starting to pick up, averaging P1,660 per bag from P1,200 in the last quarter of 2017.
RHI reported a net income of P120 million in 2017, up 18 percent from P102 million recorded a year ago, driven by the strong performance of the sugar business.
Without the non-recurring expenses of P120 million, core net income stood at P240 million, a 135-percent jump from a year ago.
Tubio said production from the company’s ethanol business would hit 78 million liters this year, up from 70 million liters in 2016.
RHI chief finance officer Celso Dimarucut said the company plans to reduce debt levels currently at P10 billion to enhance the group’s profitability.
Dimarucut said RHI this year would allocate roughly P600 million in capital expenditures, significantly lower than the previous year’s spending after completing the expansion programs of the sugar and ethanol plants.
Meanwhile, RHI said the group was facing several challenges, including the eventual effects of the additional taxes on sugar, unregulated entry of lower import priced alternative sweeteners, the tight competition on cane supply with other sugar mills, the deteriorating productivity in the cane farms due to undesirable practices and the shortage of available farm labor for cane harvesting and loading.