Imperial Sugar: Spike in Sugar Prices Sweetens Prospects

Despite the constant threat of legal issues facing Imperial, things are starting to look up for the largest publicly held US sugar producer. Imperial Sugar (IPSU) has completed the total rebuild of its Port Wentworth Refinery into a modern “state of the art” facility. The plant, which is expected to be fully operational by the end of the month will enable Imperial to refine and package sugar safer and more efficiently than the old plant.

The perfect storm: Sugar has recently climbed to historically high levels on the commodity markets .The spread between the cost of raw sugar and refined sugar has never been greater, enabling the company to hit the “sweet spot.” Although the company’s cost of raw sugar rises, the refined sugar segment rises at an even greater percentage, enabling them to significantly fatten up their gross profit margin potential. To make matters even better, the cost of natural gas has plummeted nearly 50% in the past four months (the company uses tremendous amounts in the refining process). The combination of low input costs, elevated selling prices and a higher efficiency plant sets up IPSU for a golden opportunity that probably comes around "once" every ten years.