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December 01, 2016

RHI Records 451% Jump in Net Income to PhP102M Revenues at PhP12 Billion, Up 47% EBITDA at PhP1.337 Billion, Up 34%

MANILA, PHILIPPINES — Roxas Holdings, Inc. (RHI) (PSEI: ROX) today announced its audited financial and operating results for Crop Year ended September 30, 2016 with Consolidated Net Income of PhP102 million, 451% higher than the PhP18.5 million recorded a year earlier, owing to a rise in earnings before interest, tax, depreciation and amortization (EBITDA), which rose 34% to PhP1.3 billion from PhP1.0 billion in 2015. Profitability was affected by higher interest and depreciation charges stemming from investments to expand the alcohol business and improve the efficiency of the sugar business. 
Consolidated Revenues jumped 47% to PhP12.1 billion in 2016 from PhP8.2 billion in 2015 as the sugar business unit saw its revenues rise to PhP7.8 billion from PhP5.6 billion and the alcohol business unit revenues increased to PhP4.2 billion in 2016 from PhP2.6 billion in 2015. Despite the dramatic increase in revenues, consolidated gross income remained almost unchanged as the overall gross income margin declined to 8.9% in 2016 from 12.7% in 2015. 
The 2016 Crop Year saw higher volumes and stronger prices with average prices of raw and refined sugar hitting five-year highs. Combined tons of cane milled (TCM) for the Batangas and Negros plants rose 5% to 2.7 million tons in 2016. However, the Group’s cane sourcing expenses grew to PhP1.3 billion from PhP1.0 billion, significantly reducing the gross income margin of RHI’s sugar business to 8.1% in 2016 from 11.3% in 2015. 
RHI President and CEO Hubert D. Tubio said the next Crop Year would bring benefits from the Group’s renewed relationship with planters and upgrades to equipment and processes in its sugar mills. These changes are aimed at reducing the overall cost of production, including level of subsidy extended to planters to compensate for lower efficiency. 
"The completion of the off-season repairs will enhance the efficiency and profitability of all our plants in the incoming Crop Year 2016-2017," Mr. Tubio said.  
The results of the operations of Hawaiian-Philippine Company (HPCo), an affiliated company, mitigated the reduction in gross income of RHI’s two sugar plants. The Group’s share in HPCo‘s net income rose to PhP212 million in 2016 from PhP134 million in 2015.
The alcohol business unit’s gross income increased by 46% in 2016, benefiting from the full-year impact of the acquisition of San Carlos Bioenergy, Inc. (SCBI) in May 2015. SCBI had to temporarily halt its operations for the first quarter to allow for initiatives to improve plant efficiencies to be undertaken. With the enhancements at the plant, the Group’s ethanol production rose steadily but the higher cost of molasses and lower yield during the expansion period caused the alcohol business unit’s gross income margin to drop to 5.4 % in 2016 from 5.9% in 2015.   Chairman Pedro E. Roxas said the Group is confident that its decision to invest in and expand its alcohol business will bring stable and consistent returns to RHI going forward, the country’s biggest ethanol producer with the combined capacity of Roxol Bioenergy Corporation (RBC) and SCBI at 285,000 liters per day. 
EVP/CFO Celso T. Dimarucut said that since 2015, RHI has been making significant investments to expand its alcohol business and improve the operational efficiency of its sugar business. Total capital expenditures spent had amounted to PhP0.9 billion in 2016 and PhP1.1 billion in 2015, with an additional PhP1.5 billion planned for 2017. These investments and capital expenditures were funded through a combination of equity and borrowings. RHI continues to enjoy the full support of its major shareholders, raising PhP1.1 billion in 2016 through a Stock Rights Offering and PhP1.7 billion in 2015 through the sale of treasury shares. Total Net Debt of RHI was PhP8.6 billion at 30 September 2016. 
"Our target is to achieve PhP1.7 billion EBITDA in the new Crop Year and focus on debt reduction. Depreciation may increase but only slightly, while financial expenses are expected to be flattened. Taken in the round, our profitability for 2017 Crop Year should improve," added Mr. Dimarucut.  
"We hope to have an improved positive story in the coming year as we begin to benefit from the major investments in plant and equipment we have made in recent years at our sugar and ethanol plants," Mr. Tubio concluded.

Roxas Holdings, Inc. (RHI), a bio-sugar and bio-energy company, is the largest integrated sugar business in the Philippines. It manages sugar miller/refiner Central Azucarera Don Pedro, Inc. in Nasugbu, Batangas; San Carlos Bioenergy, Inc. in San Carlos, Negros Occidental; and RHI Agri-business Development Corporation.

RHI is listed in the Philippine Stock Exchange (PSEi: ROX). Further information can be obtained by visiting the web at