Turning the spotlight on GuySuCo’s losses



When evaluating Guysuco’s profitability and/or losses as a performance indicator the conclusion reached was that the corporation has been “mired in a sea of losses and indebtedness since the 2000s.” The proposition was therefore advanced that its survival as a sustainable commercial venture rests squarely on its ability to earn regular accounting profits. Failure to achieve this would force it to rely on government handouts, bailouts and other forms of public relief in order to remain in business.

Furthermore, because Guysuco is a state-owned corporation, obtaining an economic profit is also a critical requirement when evaluating its economic efficiency. As was earlier indicated economic profit can only be established after taking into account the opportunity 20131117clivecost of those resources tied up in Guysuco’s sugar production (or the next best alternative earnings these resources can obtain). The reasoning is that this alternative is denied them because they are currently used in sugar production.

Desirable as it is, close consideration of economic profit lies well beyond the scope of the present articles; both on account of its technical complexity and lack of access to the requisite data. Despite this limitation, when I finally turn to examine the way forward for the industry, I shall emphasize the need for economic valuations of the various proposals on offer.


Overall profit & loss


Table 1 shows Guysuco’s overall profit and losses, derived from 1) its unaudited 2012 financial statements 2) its latest estimates for 2013 as contained in its Strategic Plan, and 3) the forecast provided in that Plan for 2017.



Table 1


GuySuCo: Net Profit (Losses) before tax (G$ billion)


Item                                                                2012(1)                   2013(2)                2017(3)


Overall Net Profit (Loss) before tax            (3.6)                     (5.9)                         2.6


Notes (1) = unaudited; (2)  = latest estimate; (3) = Plan forecast


Source: Guysuco, 2013


Several important features are readily discerned. First, the unaudited 2012 data reveal the persistence of overall losses accumulated in the 2000s; when losses of $4.9 billion were made in the second half of the 2000s. Second, the losses GuySuCo estimates for 2013 ($5.9 billion) are higher than in 2012 ($3.6 billion). This outcome is consistent with the substantially lower sugar output for 2013 (187,000 tonnes) as compared to 2012 (218,000 tonnes), which itself was one of the lowest outputs achieved in many years. Losses are forecasted to continue at a high rate for 2014 ($5.4 billion) (not shown in the table).

Third, GuySuCo is forecast to return to profit by 2015 ($0.9 billion). This profit increases to $2.6 billion in 2017, the end date of the Plan period. This is a substantial turnaround ($6.2 billion between 2012 and 2017), and even more significantly a turnaround of $8.5 billion for the shorter period 2013 to 2017.


Profit & loss by estate


Table 2 highlights the breakdown of profit and losses by individual estate.


Table 2


GuySuCo: Net Profit (Losses) before tax and by estate – G$ billion


Item                         2012(1)             2013(2)                2017(3)


All Estates(4)          (3.6)                   (5.9)                      2.6

Skeldon                   (2.8)                   (1.9)                      0.3

Albion                      1.0                     0.05                      1.3

Rose Hall               0.2                      (0.8)                      1.0

Blairmont              0.9                      (0.1)                      1.3

LBI                        (0.7)                      (1.5)                      (1.4)

Wales                   (0.6)                      (1.0)                      (0.2)

Uitvlugt                (0.8)                      (1.5)                      0.7

Notes: (1) = unaudited (2) = latest estimate (3) Plan forecast

(4) = totals are rounded

Source: GuySuCo, 2013

These data indicate: 1) a wide variation in performance among the estates 2) the different performance of the Demerara and Berbice estates, and 3) the critical situation at Skeldon. (I will consider the Skeldon Sugar Modernization Project, SSMP, separately, after completing the examination of all the performance indicators).

Data on the individual estates reveal the following: Skeldon is the worst performing estate in terms of losses (G$2.8 billion in 2012). It is forecasted to turn a profit by 2016, continuing into 2017 ($0.3 billion). Albion makes a profit consistently throughout the period 2013-2017, and also earns the largest profit both for 2012 and 2017. It is also the only estate that was not estimated to make a loss in 2013.

Rose Hall earns profits in 2012, but makes losses in 2013 and 2014. It, however, returns to profit from 2015 onwards. Blairmont, the fourth Berbice estate, is also profitable for every year between 2012 and 2017, except for its disastrous performance in 2013. Blairmont joins Albion as the projected highest profit earners in 2017, at the end of the Plan period ($1.3 billion).

In contrast, the profit performance of the Demerara estates is considerably worse. All of these estates make losses for the years shown in the table, except for Uitvlugt, which is projected to turn a profit in 2017. However, while Enmore’s losses double between 2012 and 2017, for the other Demerara estates these losses fall.


The rise in indebtedness


The spotlight on GuySuCo’s losses shows that when these are incurred indebtedness and arrears increase. Thus, at the end of the 2000s, GuySuCo reported total current and non-current liabilities of about $75 billion or US$370 million at the then prevailing exchange rate. However, GuySuCo’s unaudited financial statement for 2012 and its forecast for the end of the Plan period (2017) reveal (see Table 3) that its total liabilities had risen to $89 billion by 2012 and is projected to rise further to $91.2 billion by 2017. Of these, the long-term liabilities comprise the larger category; these include 1) loans connected to Skeldon; 2) the Caribbean Development Bank as well as 3) the Corporation’s pension liability, and deferred taxation. The current liabilities represent mainly trade and other credit, as well as taxes, which are payable.

This wraps up the discussion of GuySuCo’s profitability (losses) and indebtedness as a performance indicator.


Next week I start a discussion of what are termed the productivity-based performance indicators.


Table 3


Guysuco’s Liabilities (G$ billions)


Item                                                    2012(1)                2017(2)


Total Liabilities, of which               88.8                      91.2


Current                                             18.9                       11.7


Long-term                                         69.9                      79.5


Notes 1 = estimate; 2 = forecast

Source: Guysuco, 2013



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