Sugar processor Imperial Sugar has announced a loss for its third quarter ended 30 June 2005, blaming lower sales prices and increased costs.
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The company reported a net loss of $4.5m, compared to net income of $4.3m during the third fiscal quarter of the previous year.
The reduced results were primarily the result of a reduced gross margin caused by lower sales prices, higher energy, freight and manufacturing costs and higher SG&A costs, partially offset by lower raw sugar costs, lower interest expense and higher other income.
For the nine-month period, the company reported net income of $1.0m compared to $9.5m in the comparable period ended 30 June 2004.
For the three months ended 30 June 2005, net sales were $236.6m, compared to $229.6m in the three months ended 30 June 2004.
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By GlobalDataDomestic sugar volumes increased 6.4% for the quarter, as more aggressive industrial and foodservice selling increased volumes 16.8% and 14.3% respectively, while consumer volumes decreased 14.3% due to competitive pressures in the private label sector.
Domestic sales prices were 2.6% lower for the three months ended June 30, 2005 compared to the same period in 2004 reflecting the effects of increased competitive pressures resulting from a surplus of sugar on the market.
“This quarter has been a large disappointment for all of us at Imperial as I’m sure it has been for our shareholders,” said Robert A. Peiser, Imperial’s president and CEO. “We have been very proud of the accomplishments of the past three years but the high cost of energy and the cyclical nature of our industry have both turned against us in a major way. While we have expressed our concerns that these factors have been growing in past quarters, they have certainly manifested themselves to significantly affect this quarter’s results.
“Fortunately, we continue to be in an extremely strong financial position, which will allow us to weather this storm and continue to invest in our business, albeit at a rate that will reflect the current realities,” he said. “We plan to continue to initiate changes that will reduce the commodity nature of our business and its sensitivity to the commodity cycle. We also continue to seek ways of lowering our operating costs through investments in energy-related and other projects to allow us to manage our business in a more efficient manner.”
There was an operating loss for the nine months ended 30 June 2005 of $0.4m compared to operating income of $17.3m. Net sales were $703.5m compared to $695.2 m in the nine months ended 30 June 2004. For the year-to-date period domestic volumes increased 4.6%, led by a 9.4% increase in industrial sales and an 8.8% increase in foodservice volume compared to prior year. Overall domestic sales prices were 2.7% lower for the first nine months of the year compared to the same period in 2004.
