Roxas Holdings sees P300-M income turnaround this year

MANILA, Philippines - Listed sugar conglomerate Roxas Holdings Inc. (RHI) said it sees its net income to hit as much as P300 million for its fiscal year ending September 2012, a reversal of the P742-million loss incurred in its last fiscal year as its new management team moves to bring down costs and trim its P6-billion long-term debt to a more manageable level.

RHI chairman Pedro Roxas said he is confident in the company’s prospects going forward especially with a new management team in place. The company is on the way to financial recovery, posting a net profit of P99 million in the first four months of it fiscal year, or from October 2011 to January this year. This was a turnaround from the P230-million loss recorded the previous level, due to higher margins, lower expenses as well as reduced financing costs.        

Roxas said the new management team, led by former Social Security System president Renato C. Valencia, has implemented some measures aimed at turning RHI’s operations around. Among these include the restructuring of long-term loans, procurement of new banking facilities, as well as the expansion of major business groups which could allow the group to produce drinking and industrial alcohol.

Valencia said RHI’s long-term lenders comprising Banco De Oro, Bank of the Philippine Islands and Rizal Commercial Banking Corp. gave the sugar firm another period of three years on principal payment for its P6 billion worth of debt. This is seen to greatly improve the company’s liquidity position.   

To reduce administrative expenses, the company has implemented a redundancy program to cut down its labor cost and bring about a lean organization.

“We recognize that the long term growth strategy we have carried out four years ago is still very much the right one and we are optimistic that RHI, with the help of the new management team, can achieve positive results by this year,” Roxas said.

Valencia said unit Roxol Bioenergy Corp., which started tests runs in July 2011, is now producing up to 100,000 liters of ethanol a day which promises a new and regular income stream for the group.

Roxas said the company’s entry into the bioethanol business would cement its position not only as the largest but also as the first integrated sugar in the country.

He also disclosed that the combined milling production of subsidiaries Central Azucarera de Don Pedro and Central Azucarera dela Carlota has increased to 3.26 million tons of cane, or 33 percent more than the previous year’s 2.45 million tons.

With the improved cane tonnage, the combined raw sugar production expanded 22 percent to 6.1 million bags from five million.

In 2007, RHI launched a massive capacity expansion and diversification program to sustain its industry leadership in anticipation of the reduction of sugar tariffs from 38 percent to five percents by 2015.

RHI acquired infrastructure from the United States and Australia that increased its total milling capacity to 31,000 tons cane per day from 20,000 tons cane per day.