MANILA-- Largest sugar producer Victorias Milling Company Inc. (VMC) expects lower sugar production for crop year 2017 due to the El Nino phenomenon which affected the quality of sugar cane seeds.
VMC President and Chief Operating Officer Eduardo Concepcion, in an interview, said the company expects to mill about 3.1 million tons of sugar cane.
This is a bit short of VMC's earlier projection of 3.2 million tons of cane for the current crop year as a result of the dry spell which may deprive canes of optimum soil moisture for maximum growth.
"This year, the sweetness of sugar cane is less compared in the previous year and on issues of prices, we had a good start during the milling season but now, it is slowly declining," said Concepcion.
VMC's raw sugar production is also seen to decrease to 5.27 million 50-kilogram bags (LKG) from 6.21 million LKG in 2016 due to expected lower quality of canes to be milled.
"It is the peak season of the milling. There's huge supply so prices are slightly down," he noted.
"We expect a drop in production (of raw sugar) because of the quality of cane and cane variety because of the recent El Nino. Last year, it was dry and then rain started coming in so maturity of the canes were affected resulting to a lesser sugar content," he explained.
Conception said net income this crop year is also anticipated to be down due to decrease in productivity coupled with the unstable prices in the market.
He said the company is looking at around Php 700 million in net income, down 12 percent from the Php798 million earnings in 2016.
The company has originally targeted to reach about Php 1 billion, same as its net income in 2015, but eventually decreased it since prices have softened.
"We don't expect so much growth from last year since sugar recovery will be much lower," said VMC Chief Finance Officer Tess Ilagan.
For the first quarter, VMC's net income dropped almost 60 percent to Php 119 million from Php 292 million recorded for the same period last year.
Production data showed that ending November 2016, total canes hauled decreased by 283,810 tons or 28 percent, while raw sugar production decreased to 1.23 million LKG from 1.89 million LKG due to late startup this crop year and aggressive cane supply sourcing by other mills.
Meanwhile, VMC is spending Php 300 million for its capital expenditures which will be allotted for factory efficiency improvements and new technologies this year.
The company has an almost 14 percent market share in the total production of sugar in the country.
There are 27 sugar mills and 13 sugar refineries operating in the Philippines, more than half of which is located in Negros.
VMC is engaged in integrated raw and refined sugar manufacturing with plant facilities in Negros Occidental. It operates mill and refinery facilities for sugar and allied products and engineering services. (PNA)
Source: Philippines News Agency