RHI sees lower sugar production this year

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INTEGRATED sugar and ethanol producing firm Roxas Holdings, Inc. (RHI) anticipates   lower sugar production this year.

RHI President and Chief Executive Officer Hubert D. Tubio said the company expects to reap only 1.85 million metric tons (MT) of sugar in Negros Occidental and 1.35 million MT in Batangas this year.

“As far as sugar is concerned, our yield, which is true around the Philippines, the yields have declined… Last year, we have been doing 1.9 million MT. This year we’ll be hitting 1.85 million MT. That’s something to think about,” he said on Wednesday.

Citing data from the Sugar Regulatory Administration, RHI said nationwide sugar production is expected to decrease between 8% to 10%, and at worst 15%.

However, RHI still has carryover inventory of around 400,000 bags from last year.

As for ethanol, the company is targeting to produce 78 million liters, below its 82-million liter capacity. In 2017, the company produced 70 million liters of ethanol.

RHI Chief Financial Officer Celso T. Dimarucut said the company expects its earnings before interest, tax, depreciation, and amortization (EBITDA) to not stray far from the generated P1.6 billion last year.

“If we’re trying to hit the same level of EBITDA, I think it’s also driven by the fact that we’re eyeing lower operating costs, the level of investments will exceed the level of borrowings and the increase in interest expense,” Mr. Dimarucut said.

“[We can expect to] bring down the level of indebtedness in two to three years.”

The company has also set a lower capital expenditure for the year at P600 million, alloting P400 million for its sugar business and P200 million for its ethanol business.

“[The] immediate focus will be to reduce the level of indebtedness of the company. In that way, it can lessen the level of interest expense, [and] it would help increase the profitability of the company,” he added.

“[This will also] continue to improve our efficiencies and maximize the existing use of our system. Over the last two years, we’ve made significant expenses on our assets. We want to maximize the use of our assets and make the best of [it].”

Mr. Dimarucut said that the net debt of the company is about P10 billion, while the interest expense is at P400 million.

First Pacific Co. Ltd., which owns most of RHI, also owns PLDT, Inc. Hastings Holdings, Inc.,unit under PLDT’s beneficial trust fund subsidiary MediaQuest Holdings, Inc., has partial interest over BusinessWorld through Philippine Star Group, which it also controls.