VICTORIAS CITY, Negros Occidental — Listed sugar miller Victorias Milling Company Inc. (VMC) expects a lower net income this crop year 2017 amid anticipated decrease in productivity coupled with the unstable prices in the market.
VMC President and Chief Operating Officer Eduardo Concepcion said the company is looking at around P700 million in net income, down 12 percent from the P798 million earnings in 2016.
VMC has originally targeted to reach about P1 billion, same as its net income in 2015, but eventually decreased it since prices have softened.
"We don’t expect so much growth from last year since sugar recovery will be much lower," VMC Chief Finance Officer Tess Ilagan said.
In terms of production, Concepcion said the company expects to mill about 3.1 million tons of cane, same as the production in 2016.
This is a bit short of VMC’s earlier projection of 3.2 million tons of cane for the current crop year as a result of the dry spell which may deprive canes of optimum soil moisture for maximum growth.
"This year, the sweetness of sugar canes is less compared in the previous year and on issues of prices, we had a good start during the milling season but now, it is slowly declining," Concepcion said.
The company’s raw sugar production is also seen to decrease to 5.27 million 50-kilogram bags (LKG) from 6.21 million LKG in 2016 due to expected lower quality of canes to be milled.
"Plus, it is also the peak season of the milling. There’s huge supply so prices are slightly down," he added.
"We expect a drop in production (of raw sugar) because of the quality of cane and cane variety because of the recent El Niño. Last year, it was dry and then rain started coming in so maturity of the canes were affected resulting to a lesser sugar content," Concepcion explained.
For the first quarter alone, VMC’s net income dropped almost 60 percent to P119 million from P292 million recorded last year.
Production data showed that ending November 2016, total canes hauled decreased by 283,810 tons or 28 percent while raw sugar production decreased to 1.23 million LKG from 1.89 million LKG due to late startup this crop year and aggressive cane supply sourcing by other mills.
VMC, the biggest local producer of sugar, is spending P300 million for its capital expenditures which will be allotted for factory efficiency improvements and new technologies this year.
VMC has an almost 14 percent market share in the total production of sugar in the country. There are 27 sugar mills and 13 sugar refineries operating in the Philippines, more than half of which is located in Negros.
VMC is engaged in integrated raw and refined sugar manufacturing with plant facilities in Negros Occidental. It operates mill and refinery facilities for sugar and allied products and engineering services.
Its operating subsidiaries include Victorias Food Corp., Victorias Agricultural Land Corp., Canetown Development Corp. and Victorias Golf and Country Club Inc.