SAO PAULO - Brazil's Biosev SA, the world's second largest cane processor, reversed a loss in the quarter ended in March, after rising sugar prices helped offset the impact of a heavy debt burden.
The company, which is controlled by French commodities trader Louis Dreyfus, earned 50 million reais ($13.8 million) in net income in the three months through March, according to a statement on Wednesday. Biosev had lost 221 million reais in the same quarter a year earlier.
Net revenue, however, fell 6 percent to 1.4 billion reais in the quarter. The company may fail to take full advantage of higher sugar prices because of a strategy of hedging a large part of its future production.
Biosev hedged 74 percent of its sugar in New York at an average price of 13.76 U.S. cents per pound. Futures prices closed at 17.41 cents a pound on Wednesday.
"The business environment improved during the last crop, as sugar prices showed an important recovery," Chief Executive Officer Rui Chammas said in the statement. An expected sugardeficit this year will consume global stocks, helping to sustain higher prices for the long run, he added.
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Earnings before interest, tax, depreciation and amortization, a gauge of operating profit known as EBITDA, fell 6 percent to 477 million reais in the quarter.
The cane processor ended the 2015-16 crop (April-March) crop with total crush of 31 million metric tons, up 9 percent from the 2014-15 season. Capacity utilization at Biosev mills rose to 85 percent from 77 percent, a five-year high, helping put a lid on costs, the statement said.
The company will discuss its results at a conference call on Thursday.
