The Fiji Sugar Corporation sold $209.7 million worth of sugar in the 2022-2023 financial year, the highest in the last nine years.
With this, the FSC share of proceeds reached $64.3 million, the most favourable in the last 16 years.
Highlighting this during FSC’s annual general meeting in Lautoka yesterday, Chairman Pradeep Lal said the company sold 1.6 million tonnes of sugar.
Lal said this factor has contributed to the reduction in the Government’s support for the guaranteed cane price of $85 per tonne of cane.
He said on average, the Government has allocated approximately $41.5 million annually for the guaranteed price since 2018 season, with $52.5 million allocated in 2018, $50.9 million in 2019, $42.9 million in 2020, $18.9 million in 2021, and zero funding in 2022 season.
Lal said it is projected that no contribution will be required from the Government for the 2023 season.
“FSC’s financial success is underlined by its impressive positive Earnings Before Interest, Taxes, Depreciation, and Amortisation (EBITDA), of $17.9 million for the 2022-2023 financial year, and is a turnaround from the negative $6.7 million recorded in the preceding year, an improvement of $24.6 million.
“A positive EBITDA means that the company is profitable at an operating level.”
Lal said FSC further envisages a record positive EBITDA of $31.6 million for the coming financial year with a crop of only 1.66 million tonnes.
He said the conversion of Government debt amounting to $200.2 million into equity in 2020 resulted in FSC’s overall debt burden to substantially reduce from $485.9 million as at 31st May 2023 to $285 million.
“It’s imperative to emphasise that these financial obligations primarily constitute legacy debts, and their successful reduction marks a pivotal step towards bolstering the Corporation’s financial viability.”
“Over the past five years, they have spent over $70 million towards the upkeep of its ageing mills, ensuring their smooth operation with minimal disruption.”
Meanwhile, FSC is implementing a Structured Capital Works and Preventative Maintenance Program, underscoring a proactive approach to sustainably maintaining the facilities.
Lal added FSC has diligently worked towards optimising its operations to attain a sustainable financial equilibrium and today, through a concerted commitment to efficiency and cost-effectiveness, the operating cost has been prudently reduced to an average of about $59 million from over $90 million in 2016, highlighting a substantial 34 percent reduction in operating costs.
“FSC has substantially lowered the breakeven point to a crop of 1.6 million metric tonnes, an improvement from the previous benchmark of 2.4 million metric tonnes. FSC was able to achieve a significant reduction in payroll cost, a reduction of $10 million (30 percent) from $34 million in 2018 to $24 million for 2022.”