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Rogers Sugar Q1 profit drops

Higher shipping costs, a shrinking sugar beet crop and lower consumer sales helped bite deep into Rogers Sugar’s bottom line for the company’s first quarter (Q1).

The Montreal-based income trust, which operates as Rogers Sugar in Western Canada and Lantic Sugar in the East, on Wednesday posted net earnings of $73,000 on $138.4 million in revenues for the quarter ending Dec. 31, down from $18.5 million profit on $173 million in revenues in the year-earlier period.

The company saw higher volumes of 185,732 tonnes for the quarter, up from 173,045 in the year-earlier period, based on increased liquid sugar and export sales.

Offsetting that, however, was a drop in the company’s higher-margin consumer sales “due to the loss of volume to non-traditional retail accounts and to competitive market activities.”

The company’s adjusted gross margin for the quarter was $152.62 per tonne, compared to $175.12 for the 2007 Q1, due to an “unfavourable sales mix” of lower consumer volume and higher liquid volume, plus a decrease of about $1 million in byproducts revenue due to a drop in the sugar beet crop feeding the company’s Taber, Alta. refinery.

Increased export sales were due partly to the U.S. Department of Agriculture’s special increase in its refined sugar quota in August 2008, to cover damage to a major U.S. cane refinery. Out of over 272,000 tonnes of extra quota, 40,000 was allocated to Canada. USDA required that Canada’s tonnage come entirely from Taber beet sugar.

USDA in October then made unused special quota from Mexico available, allowing Lantic to ship about 26,000 tonnes, of which 11,500 were booked as Q1 sales.

The higher sales to the U.S. and the costs of shipping sugar from Vancouver to cover shortfalls from the lower Taber beet crop also meant an extra $1.7 million in distribution costs for Q1, the company said.

The 2008 sugar beet harvest feeding into Rogers’ Taber facility was completed in early November, the company said, and due to the low acreage and resulting harvest, all slicing was completed by mid-December.

Total Alberta beet sugar production will be about 56,000 metric tonnes when the process of thick juice is completed this month. Thus, Rogers said its Vancouver and Montreal cane refineries will have to ship refined sugar to the Prairie market to replace the shortfall of Taber’s beet crop in later fiscal quarters.

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