December 04, 2019
RHI's 2019 Losses Expanded due to Writedowns; Debt Reduction Continues
MANILA, PHILIPPINES — Listed integrated sugar and ethanol producer Roxas Holdings, Inc. (RHI) (PSEi: ROX) today reported a net loss of Php1.9 billion for the fiscal year ended 30 September 2019 from a net income of PhP55 million for the same period last year. The Group recognized non-recurring losses of PhP1.1 billion during the last quarter of the fiscal year due mainly to the derecognition of certain deferred tax assets.
RHI Executive Vice President and Chief Finance Officer Celso T. Dimarucut said that “the derecognition of certain deferred tax assets was required by accounting standards and would not have any impact on the cash flow of the Group.”
“We faced a very tough market during the past year. Philippine sugar output for Crop Year 2018-2019 was down 17.12% year-on–year at 2.072 million metric tons due to unfavorable weather conditions. Talks on the liberalization of the sugar industry were also rampant during the period, causing a softening of sugar prices, while feedstock costs continue to increase. Our results reflect the impact of these challenges,” said RHI Chairman Pedro E. Roxas.
Consolidated Revenues increased to PhP13.3 billion (including revenue from discontinued operations amounting to PhP6.3 billion) attributable to higher sales volume and price of alcohol, as well as milling revenues amounting to PhP1.5 billion recognized following the adoption of the Philippine Financial Reporting Standard (PFRS) 15 regarding ‘Revenue Recognition’.
Consolidated Net Loss before non-recurring losses amounted to PhP769 million from Net Income of PhP55 million in the previous year as a result of higher feedstock costs, lower sugar production volume and increases in interest costs.
“While we continue to strive to reduce our overall level of indebtedness, higher interest rates partially negated the impact of these efforts,” Mr. Dimarucut said. Net Debt decreased from PhP10.7 billion in 2018 to PhP9.8 billion in 2019. Net proceeds from the sale of certain assets in November 2019 were used to further reduce long-term debt by close to PhP900 million. “We will continue to look for opportunities to significantly reduce our debt levels,” Mr. Dimarucut added.
RHI President & CEO Hubert D. Tubio also noted that while the sugar business grappled with some challenges during the period, the Group’s ethanol business achieved some operational improvements in 2019 due to the upgrades in its equipment and systems.
“Our ethanol units registered the highest production volumes in the past three years, better than the target for 2019,” Mr. Tubio said.
One of RHI’s ethanol units, Roxol Bioenergy Corporation (RBC), also recorded its highest methane fuel displacement of 60.67% last May 2019 as the anaerobic digesters (ADs) continue to generate improved levels of biogas. RBC was endorsed by SGS Philippines for ISO 9001:2015 certification last September 2019 after it passed the second stage of certification audit. The ISO 9001 certification is an international standard that specifies the requirements for a quality management system.
Mr. Tubio also assured that amidst the challenges the Company is facing, the Group is working with its partners to reverse the trend. “We expect that next year will be better following the Senate’s unanimous resolution against sugar liberalization which should help stabilize the market. RHI is a resilient company that continues to seek ways to refine its competitive advantage despite the many ongoing industry challenges. We are actively engaging our stakeholders as we work closely with government in crafting solutions to issues hounding the industry,” Mr. Tubio said, adding that the Company has accelerated its efforts to improve operational efficiencies.
RHI is listed on the Philippine Stock Exchange (PSEi: ROX). Further information can be obtained by visiting the web at www.roxasholdings.com.ph