Thoughts and prayers go out the families involved in this horrific event after an explosion killed 5 and injured dozens at an Imperial Sugar refinery near Savannah, GA.That said, the prudent investor asks, "and then what?" The Georgia refiner is one of only two of IPSU's facilities and has a production level of 14.5 million hundredweight or just under 1.5 billion pounds of sugar. This amounts to 57% of the firm's refining capacity and $482M of the company's $851M of '07 refined sugar sales. The question stands. For an interruption in refining that will likely come due to this tragedy, is a market value drop of $20.3M, or 2.4% of sales, commensurate with the underlying risks of production disruption and possible litigation?
The company faces further battles as Mexican sugar is now duty free as of 1/1/08; also, the Farm Bill (subsidies) expires on "September 30, 2008 and is currently under review by the U.S. Congress. The current version of the Farm Bill passed by the U.S. House of Representatives has several key factors which may negatively affect the Company's ability to purchase its raw sugar requirements (fiscal year 10k, page 10)."
All that goes into the sugar you enjoy with your morning coffee.
1 comment:
You are quite a talented writer. I'd like to read something of yours more than two paragraphs... just forward me something you've written before.
Tucker
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