Sugar Land-based Imperial Sugar Co. reported a net loss of $19.3 million for its fiscal year ended Sept. 30, including a $13.9 million loss from dicontinued operations.
That included a loss on the sale of the company’s Holly Sugar subsidiary, which was sold in September for $51.1 million in cash plus “certain escrow amounts withheld” totaling $3.8 million, the company said.
“We are obviously not pleased with our financial performance during this past year,” said Imperial President and CEO Robert A. Peiser. “As we have previously discussed with investors, the combination of ever-increasing energy costs and very low sugar prices, particularly earlier in the year when a substantial volume of industrial business is often booked on an annual basis, created a very difficult operating environment.”
Imperial recently announced the elimination of 40 jobs, representing 20% of the staff at its Sugar Land headquarters. Among those losing their jobs is Executive Vice President and Chief Operating Officer Paul Durlacher, and Vice President – Marketing Art Saxby.
Peiser said industry conditions may be more favorable in 2006 than 2005, however, “operations throughout the Southeast have been severely impacted during the post-hurricane period, leading to increases in the cost of transportation and supplies, at the same time that energy costs used in our manufacturing process have actually accelerated their upward trajectory.”
“On the other hand,” he said, “the supply situation within the industry has changed dramatically as a result of a projected smaller sugar beet crop and the hurricanes’ impact on both refining capacity as well the size of the Louisiana and Florida sugar cane crop.
“As a result of these factors, we have been able to increase prices in a manner that should allow us to recover our costs and improve our margins. While it is extremely difficult to predict how long these market conditions will last, at this time we expect our financial performance during 2006 to be more acceptable than what we experienced in 2005.”
For the year ended September 30, 2005, revenues from continuing operations increased to $803.8 million from $785.9 million in fiscal 2004, because of higher industrial and foodservice volumes. The lower operating results were primarily the result of a reduced gross margin of 5.3% of sales in fiscal 2005 compared to 8.0% of sales in the prior fiscal year, the company said.
