Often in life, it seems that every step forward comes with another step back. Investors in sugar refining firm Imperial Sugar Company (Nasdaq: IPSU) must be feeling that way after the latest earnings report and the stock's current slide.

Imperial Sugar appeared to be poised for big things in the near future. Management previously stated that decreased sales volumes (because of an explosion at one of its large refineries two years ago) would end when the refinery's reconstruction, scheduled for this past January, finished. The company continued its dividend payment to shareholders, and its price-to-book ratio was incredibly low. All of this seemed to foreshadow a potential run up on the firm's stock price, but like an M. Night Shyamalan movie, an awkward and nightmarish plot twist arrived.

Imperial couldn't fix the damaged refinery as quickly as it planned. The refinery could only increase to 80% of capacity, from 60% in the previous quarter, continuing to drag down potential sales volume. In addition, the company had challenges starting up its specialty products segment, and could not deliver a full line of products to clients such as Dr. Pepper Snapple Group (NYSE: DPS). However, to really top things off, Imperial also realized a loss of $24.8 million on hedging activities designed to guard against increases in raw sugar prices. In total, the sugar producer reported a loss of $2.82 per share for the quarter.

While this may seem bleak for Imperial Sugar's prospects, things could still turn around. Increased refinery capacity contributed to a 43% increase in sugar volumes. Along with a 15% increase in refined sugar prices, that spurreda 68% increase in sales year over year. As refinery capacity continues to increase, there is potential for even more improvement in sales.

Investors will have to keep an eye on Imperial going forward. Though the firm will likely surmount its refining capacity issue, losses on hedging activity are difficult to predict. For those who expect raw sugar prices to climb in the future, Imperial is still a good bet. However, should raw sugar prices decline, investors can expect another tough quarter.

More on the sugar refining industry:

Gerard Torres does not own shares in any of the companies mentioned in this article. The Fool disclosure policy makes a good turkey and cheese sandwich.