Low sugar prices deliver blow to Imperial Sugar income

by Eric Schroeder
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SUGAR LAND, TEXAS — A steep decline in sugar prices led to a sharp drop in income at Imperial Sugar Co. in the third quarter ended June 30. Net income for the quarter totaled $7,603,000, equal to 66c per share on the common stock, down 50% from $15,210,000, or $1.35 per share, in the third quarter of last year.

Net sales for the period also took a hit, falling 7% to $216,356,000 from $231,294,000.

During the quarter, domestic sugar prices decreased 10% from high price levels that transpired in 2006. Contributing to the lower prices has been a historically high beet crop, which has pressured volumes and prices, particularly in the industrial and food service channels.

"Our third fiscal quarter results remain at an acceptable level in the face of current domestic supply conditions," said Robert A. Peiser, president and chief executive officer of Imperial Sugar. "We are pleased to have been able to sustain margins and operating profits at above average levels in spite of weaker market pricing, aided in part by lower raw sugar and energy costs.

"Fiscal 2008 is shaping up to be a challenging year in the domestic sugar market. However, we have seen these cycles before and are well positioned to work through it while continuing to make investments in the company that are expected to improve future performance."

Just prior to the end of the third quarter, Imperial Sugar said it sold the site of its former refinery in Sugar Land, which closed in 2003, for $6.5 million. The company expects to recognize a gain of approximately $1.9 million in the fourth fiscal quarter in connection with the sale.

Imperial Sugar also said it extended the maturity on its $100 million senior secured revolving credit agreement to 2011 from 2008.

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