VMC profit falls as sugar prices decline

VICTORIA’S Milling Company, Inc. ( VMC) recorded a doubledigit drop in earnings for the September to November 2017 period, dragged by declining sugar prices accompanied by rising costs in production.

In a regulatory filing on Wednesday, the listed firm posted a net income attributable to the parent of P46.75 million in the three months ending November 2017, 60% lower than the P119.63 million it generated in the same period in 2016.

This comes amid a 38% increase in revenues for the period to P1.84 billion, compared to the P1.33 billion realized in the same period a year ago. Revenues from sugar milling operations accounted for the bulk of the total.

For the refined sugar component, VMC said it tripled its volume, selling 704,000 50-kilogram ( LKG) bags during the quarter, from a net production of 1.18 million LKG. One LKG is equal to one 50- kilogram bag of sugar. This generated P694-million revenues for the company, even as average refined sugar prices slipped by 18%.

VMC noted there was no alcohol production for the period due to the ongoing expansion of its facilities. Demand for the product declined for the period, resulting to a 64% drop in revenue contributions or P92 million.

The raw sugar segment, meanwhile, accounted for P71 million of revenues, amid a 22% hike in raw sugar prices recorded in the industry. Raw sugar milled in the first quarter was recorded at 1.82 LKG per ton cane, indicating a 40% increase in total raw sugar production.

Molasses produced also increased to 39,000 metric tons, 44% higher than the 28,000 metric tons produced in the same period a year ago. Higher volumes sold, however, failed to offset the average increase in sugar prices, the company said.

“Management’s course of action is to continue implementing cost control measures in this challenging condition but remains optimistic about the future prospects of the business due to stable demand and possible recovery of prices in succeeding quarters,” the company said.

Incorporated in 1919, VMC’s core business is the operation of mill and refinery facilities for sugar production, as well as engineering services. Its subsidiaries include Victorias Food Corp., Victorias Agricultural Land Corp., Canetown Development Corp., Victorias Green Energy Corp., and Victorias Gold and Country Club, Inc.

Shares in VMC were flat at P2.90 at the Philippine Stock Exchange on Wednesday.