Victorias Milling sees profit drop on lower production

VICTORIAS CITY, NEGROS OCCIDENTAL, Philippines – Listed sugar miller Victorias Milling Co. expects lower earnings for crop year 2017 amid an expected decline in productivity coupled with unstable prices in the market.

VMC president and COO Eduardo Concepcion said the company was looking at a net income of P700 million, down 12 percent from the P798 million recorded in 2016.

“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, roughly the same level as last year.

This is lower than VMC’s earlier projection of 3.2 million tons of cane due to the dry spell which may deprive canes of optimum soil moisture for maximum growth.

“This year, the sweetness of sugar canes is less compared to the previous year and on issue 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 due to the expected lower quality of canes to be milled.

“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 was affected resulting to less sugar content,” Concepcion said.

For the first quarter alone, VMC’s net income fell almost 60 percent to P119 million as 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.

The country’s biggest local producer of sugar, is spending P300 million for its capital expenditures, mostly going to factory efficiency improvements and new technologies.