“Imperial’s results continue to be affected by the margin compression experienced in the second half of last fiscal year, driven by high raw sugar prices and competitive pricing dynamics,” commented John Sheptor, president and CEO of Imperial Sugar, “although we were able to increase prices during the quarter sufficient to improve margins on a consecutive quarter basis. Production rates at the Port Wentworth refinery in the first quarter were largely unchanged and costs remained high. We continue to focus on operating reliability and efficiency to improve results.”
Revenues for the first quarter were unchanged as 18% higher sales prices offset a 16% reduction in sales volumes relating principally to the contribution of the Gramercy refinery to Louisiana Sugar Refining LLC in January 2011. Gross margins on a hedge accounting basis and excluding the impact of LIFO inventory reductions declined to 1.2% of sales in the quarter ended December 31, 2011 from 1.4% in the same period of the prior year, as increases in raw sugar costs exceeded sales price improvements. On a consecutive quarter basis, gross margin on a hedge accounting basis excluding LIFO improved from a negative 4.2% in the quarter ended September 30, 2011.
Sheptor continued, “We have maintained compliance with the terms of our revolving credit agreement and are exploring opportunities to improve liquidity. We are in the late stages of exploring with our partner the potential sale of our interest in Wholesome Sweeteners to a third party.”
Capital expenditures during first quarter of fiscal 2012 were $4.2 million, principally for safety, environmental and equipment replacement projects. The Company reported that it had undrawn availability under its amended revolving credit agreement of $18.4 million, at February 7, 2012 after deducting $70.1 million of borrowings.
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