GERMANY – Südzucker Group, Europe’s largest sugar producer, has announced a 45 percent decline in its first-quarter earnings, primarily due to rising costs and lower sugar prices.
The company reported an operating profit of US$167.9 million for the quarter ending May 31, compared to US$307.14 million in the same period last year.
Group revenues for the quarter saw a slight increase, rising to US$2.78 billion from US$2.74 billion in the previous year. While revenues declined in the special products, CropEnergies, and starch segments, they increased in the sugar and fruit segments.
In April, Südzucker had warned that high costs related to energy, raw materials, logistics, and packaging, combined with weak sugar markets, would negatively impact first-quarter earnings.
The company has also cautioned that second-quarter earnings are expected to decline, although specific figures were not provided.
In May, sugar futures hit an 18-month low due to anticipated large sugar harvests in Brazil but have since experienced a slight recovery. Despite falling prices, Südzucker’s sugar revenues rose by 16.5 percent to US$1.17 billion, driven by substantially higher exports from the EU to global markets.
The company has reaffirmed its forecast that full-year group operating profit will fall to between US$544.4 million and US$653.3 million, down from US$1.03 billion in the previous fiscal year, which ended in February.
It also projects that full-year sugar sector operating profit will decrease to between US$217.8 million and US$326.7 million from US$607.6 million last year, burdened by rising costs and expected low prices.
Südzucker highlighted that its results are still subject to market volatility caused by the ongoing war in Ukraine.
The EU’s decision to grant Ukrainian agricultural products, including sugar, duty-free access to the EU market has introduced uncertainties, despite restrictions on volume.
The company plans a moderate increase in its sugar beet cultivation area for the autumn/winter 2024 harvest compared to the previous year, expecting an average harvest overall.
Südzucker Group, a subsidiary of Südzucker AG, operates globally with special products, starch, and fruit segments.
Its product portfolio includes sugar, speciality sugar products, glucose syrups, functional ingredients, frozen and chilled pizza, portion packs, ethanol, animal feed, starch, fruit preparations, and fruit juice concentrates.
During the financial year 2023/2024, the company produced 4.1 million tonnes of sugar, operating 23 sugar factories across Europe and two refineries.
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