Sugar processor the Imperial Sugar Company today (Wednesday) announced a move into loss for the year ended 30 September 2005, blaming high energy costs and low sugar prices.
The company incurred a loss from continuing operations of US$5.4m, compared to income of US$7.5m the year before. It reported a net loss of US$19.3m for the year, including a loss from discontinued operations of US$13.9m, compared to a profit of US$15m the year before.
Discontinued operations include the loss on sale of its Holly Sugar subsidiary which was sold in September 2005 for cash proceeds of US$51.1m, plus certain escrow amounts withheld totalling US$3.8m.
Revenues from continuing operations increased to US$803.8 million from US$785.9 million the year before, because of higher industrial and foodservice volumes.
“We are obviously not pleased with our financial performance during this past year,” stated Robert A. Peiser, Imperial’s president and chief executive officer. “As we have previously discussed with investors, the combination of ever increasing energy costs and very low sugar prices, particularly earlier in the year when a substantial volume of industrial business is often booked on an annual basis, created a very difficult operating environment. We are fortunate, however, to have positioned the company’s balance sheet so that we can easily withstand such years and work towards periods where industry dynamics are more favourable.
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“It would appear that industry conditions in 2006 might well be more favourable,” he said. “On the negative side, operations throughout the Southeast have been severely impacted during the post-hurricane period, leading to increases in the cost of transportation and supplies, at the same time that energy costs used in our manufacturing process have actually accelerated their upward trajectory. On the other hand, the supply situation within the industry has changed dramatically as a result of a projected smaller sugar beet crop and the hurricanes’ impact on both refining capacity as well the size of the Louisiana and Florida sugar cane crop. As a result of these factors, we have been able to increase prices in a manner that should allow us to recover our costs and improve our margins. While it is extremely difficult to predict how long these market conditions will last, at this time we expect our financial performance during 2006 to be more acceptable than what we experienced in 2005.”
For the fourth quarter, the company reported a loss from continuing operations of US$2.8m, compared to income of US$3.7m the year before. Net sales from continuing operations for the fourth quarter were US$226.6m, compared to US$209.8m last year due primarily to an increase in domestic sugar volume.