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Sugar price rally lifts Suedzucker profits

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The surge in sugar prices helped Suedzucker's first-half net profit up 81% at E155m.

The company, the largest sugar refiner in Europe, said it expected group operating profit this year starting in March to reach E340m-390m from E241m in the previous year.

In its core sugar sector, the first-half operating profit is up E40m from E13m a year ago, the company said.

Suedzucker shares closed up 1.5% at E24.68 in Frankfurt.

Sugar segment higher

The sugar segment's revenues declined to E1.382bn, compared with E1.52bn the previous year.

The decline was led by a drop in EU sugar quota volumes in the second quarter and falling non-quota sugar volumes due to a weaker harvest last year.

However, shortfall in global sugar production, along with increased consumption has led to rising prices.

Since the beginning of the year, prices have soared from E375 per tonne to more than E500 a tonne.

Beet cultivation positive

Suedzucker expects an above average beet yield of just under 76 tonnes per hectare, "as a result of high rainfall in June and July," the company said in its half-year report.

"Sugar yield will come in at the average level of the past five years," it said.

Other segments

The special products segment's revenue rose from E886m to E905m.

CropEnergies operating results have also held steady, despite declining ethanol sales revenue.

The segment's revenues were posted at E313m, compared with E356m the previous year.

"Aside from steadily declining ethanol sales revenues, the downturn was driven by reduced bioethanol volumes resulting from lower trading volumes," the company said.

The fruit segment's revenues, however, rose to E605m, up from E566m last year.

"While the fruit preparations division was able to boost volumes further, the higher revenues in the fruit juice concentrates area are attributable mainly to a strong recovery in sales revenues," the company said.

The segment's revenues were posted at E313m, compared with E356m the previous year.

Outlook

Looking ahead, the company continues to expect revenues of E6.4bn-6.6bn in the year 2016-17.

"We expect the sugar segment's revenues to remain the same as last year," Suedzucker said.

The company said it expects the sugar segment's revenue to remain the same as last year, while the special product's segment's revenue are expected slightly higher.

"We expect the CropEnergies segment's revenue to range between E595m-645m and the fruit segment's to rise significantly," the company said.

By Tanya Ashreena

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