Imperial Sugar Co. (IPSU) Tuesday reported a narrower loss for the fourth quarter, reflecting higher revenues as well as a gain related to domestic raw sugar futures contracts. The company currently expects raw sugar costs reported in 2010 to be higher. Imperial Sugar shares are currently trading down nearly 12% on the Nasdaq.
Net loss for the quarter was $0.19 million or $0.02 per share, narrower than $5.14 million or $0.44 per share in the prior-year quarter.
The current year results included a pre-tax gain of $27.9 million related to domestic raw sugar futures contracts intended to hedge fiscal 2010 purchases, while last year results included a $10.0 million pre-tax charge related to the Port Wentworth refinery accident that occurred in February 2008.
Net sales increased to $147.32 million from $124.81 million in the comparable period, due to higher domestic refined prices and increased sales volumes.
Imperial Sugar noted that results for both fiscal 2009 and 2008 reflect the absence of a fully operational Port Wentworth refinery which normally comprises approximately 60% of the company's refining capacity. The company expects that Port Wentworth will become fully operational in the second quarter of fiscal 2010.
Gross margin as a percent of sales was 13.3%, compared to a negative 3.9% last year as a result of the raw sugar derivatives gain. Higher manufacturing costs resulting from the Port Wentworth start up and higher raw sugar costs, offset in part by higher sales prices and lower energy prices negatively impacted gross margin for the quarter.
For fiscal 2009, net loss was $23.18 million or $1.98 per share, wider than $20.92 million or $1.79 per share in the previous year. Net sales for the full year dropped 11.8% to $522.56 million from $592.42 million in the comparable period, mainly due to lost production from the Port Wentworth refinery.
Imperial Sugar noted that domestic raw sugar prices increased rapidly during the quarter in response to significantly higher world raw sugar prices. The gains on raw sugar futures contracts did not qualify for deferral accounting normally employed for derivatives as delays in the restart of the Port Wentworth refinery made it impossible to accurately forecast the timing and volume of raw sugar purchases. Accordingly the gain was recognized in 2009. Thus, the company expects raw sugar costs reported in 2010 will be higher as a result of this accounting treatment.
IPSU is currently trading at $16.07 per share, down $2.18 or 11.95%, on 224,210 shares on the Nasdaq.
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