LISTED Victorias Milling Corp. (VMC), one of the country’s leading sugar companies, posted a net income of P237 million for the first six months ending February 2018, down 53 percent from P504 million a year ago, due mainly to a big drop in sugar prices and higher costs.
In a disclosure to the Philippine Stock Exchange on Monday, the sugar producer said net income for the six months to February fell by more than half from a year ago as lower sugar prices and an increase in costs outweighed higher refined sugar sales.
It said that despite the decline in sugar prices, the group generated a 3-percent increase in revenue compared to the same period last year.
This was mainly driven by a 45-percent increase in refined sugar sales volume of 1.8 million LKG (50-kilo bags) as compared to 1.2 million LKG sold in the same period last year.
Refined sugar sales, which comprise 71 percent of total revenue, amounted to P3 billion in the first half.
Raw sugar sales and tolling volume declined by 30 percent and 52 percent, respectively, and together with depressed raw sugar prices, resulted in total revenue of only P927 million.
Total cost of goods sold as a percentage of revenue increased from 73 percent to 87 percent due to higher cost of canes and other raw materials and higher cost of off-season repairs incurred last quarter.
“Over-all, the significant decline in sugar prices and increase in costs in the first half of CY 2017-2018 contributed to the decline in the Group’s gross profit as compared to the same period last year,” VMC said.
The sugar company, however, remains optimistic about its prospects amid strong demand for its products.
“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,” VMC said.