Louis Dreyfus sugar unit Biosev reports 2nd-quarter loss
SAO PAULO Nov 13 (Reuters) - Biosev SA, the Brazilian sugar and ethanol unit of French commodities trader Louis Dreyfus Corp, posted a quarterly loss as revenue fell due to stock building efforts.
The company, the world's second largest sugar cane processor, on Wednesday reported a loss of 42.4 million reais ($16.6 million) for its fiscal second quarter ended in September from profit of 80.4 million reais last year. Net revenue fell 16 percent due to stock-building efforts and a 148 percent jump in financial costs from the stronger dollar.
Without adjusting its outlook on crushing, the volume of cane harvested will be at the low end of its forecast of 29 million to 31.5 million tonnes for the season from April 2014 to March 2015 season, the company said.
Although adjusted net debt rose 11 percent to 4.10 billion reais on Sept. 30 from the end of the first quarter on June 30, Biosev reduced short-term debt by 11 percent as it shifted to longer-term commitments.
Net debt as a ratio to EBITDA, or earnings before interest, taxes, depreciation and amortization, rose to 4 from 3.2, with the company citing the high level of financially liquid stocks of sugar and ethanol being held.
Like many of its peers, Biosev is holding off selling products in the near term to benefit from expected higher prices later in the season.
Expectations of improving sugar prices over the next year were reflected in a drop in hedging, which fell to the equivalent of 348,000 tonnes of sugar in No. 11 sugar futures contracts on the New York ICE exchange, from 1.45 million tonnes worth held on Sept. 30 a year ago.
Investments in processing and cane area expansion fell 69 percent in the quarter as the company focused capital expenditures on crop maintenance and ongoing operations.
Net revenue fell by 17 percent to 1.11 billion reais ($431 million) over the period, as it stockpiled product. Sugar production was down 19 percent in the quarter from 689,000 tonnes a year ago, while ethanol output was up 10 percent.
Sugar stocks were up 18 percent from a year ago, and ethanol stocks rose 99 percent.
Its fiscal year begins on April 1, with the start of the cane harvest. (Reporting by Reese Ewing; Editing by Jeffrey Benkoe)
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