Decline in sugar prices gnaw on profitability of Victorias Milling
The decline in sugar prices, coupled with higher production costs, pulled down the earnings of sugar firm Victorias Milling Co. Inc. (VMC) in the nine months ending May this year.
In a disclosure, VMC said net income attributable to shareholders of the parent company had totaled P1.22 billion during the reporting period, down by 28 percent from P1.69 billion in the same period a year ago.
“The decline in results is mainly due to the plummeting sugar price, which is about a 20-percent drop compared with the same period last year, the slower movement of refined sugar and the decline in power export,” VMC said.
“While the sugar price is trending downwards, the production costs continue to rise due to increased costs of labor and materials,” it added.
VMC reported that nine-month revenues had fallen by 32.77 percent to P10.05 billion, with its sale of goods dropping by almost 33 percent to P7.47 billion.
Both raw and refined sugar sales decelerated, ending at P3.5 billion and P1.54 billion, respectively.
The listed firm also said its cost of sales and services, primarily comprising inventories used, slid by 30.7 percent to P8.6 billion.
Inventories used, depreciation and amortization, materials and supplies, professional fees and contracted services, and fuel costs fell.
However, the expenditures on repairs and maintenance, direct labor and taxes and licenses expanded.
Meanwhile, VMC’s gross profit amounted to P1.44 billion, plummeting by 42.93 percent.
Total assets stood at P14.5 billion, mainly fixed assets, cash and cash equivalents, receivables and inventories.
“Despite the industry and operational challenges, the Group remains resilient and maintains a strong balance sheet, with an 8 percent growth in stockholder’s equity during the period,” it said.
“The group continues to invest [in] capital expenditure aimed to upgrade the plant and improve operational efficiencies, where some are expected to be implemented within the crop year,” it added.
VMC is into sugar milling, refinery, power generation and distillery operations, which heavily invest in property, plant and equipment.
