First-quarter sales, income down at Imperial Sugar

by Ron Sterk
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SUGAR LAND, TEXAS – First-quarter net income declined 22% and sales dropped 5% from the same quarter a year ago due mainly to an 11% decline in domestic prices, the Imperial Sugar Company said.

Net income for the first quarter of fiscal 2008 ended Dec. 31, 2007, was $12.3 million, or $1.04 per share, compared with $15.7 million, or $1.37 per share, in the first quarter of fiscal 2007. Operating income was $3.6 million, down from $23.5 million a year earlier.

"Pricing pressure was experienced across all market channels, resulting from prospects of an oversupplied market from a historically large beet crop," the company said.

Net sales for the first quarter were $215.5 million, down from $227 million in the first quarter of 2007. Gross margin as a percentage of sales decreased to 8% from 17% a year earlier, due to lower sugar sales prices and higher freight and manufacturing costs, offset partly by small decreases in raw sugar and energy costs, Imperial said.

"We are reasonably pleased with our operating results for our first fiscal quarter given the challenging environment that is present within the cyclical domestic sugar market," said Robert A. Peiser, Imperial president and chief executive officer. "Fortunately, Imperial is well positioned both operationally and financially to withstand this down cycle," he said.

"Our joint venture with the Santos group to market sugar in Mexico, which we initiated during the first fiscal quarter, is an important initiative for Imperial in the expanded NAFTA (North America Free Trade Agreement) market," Mr. Peiser said. "I am pleased with the amount of Santos sugar production that the venture has sold in its first six weeks of operations."

Imperial Sugar Company is one of the largest processors and marketers of refined sugar in the United States to food manufacturers, retail grocers and food service distributors. The company’s nationally branded products include Imperial, Dixie Crystals and Holly.

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