Fiscal year 2016/17
Special products segment
The special products segment is comprised of the BENEO (BENEO-Orafti/BENEO-Palatinit/BENEO-Remy), Freiberger , PortionPack Europe divisions, as well as AGRANA's starch and bioethanol businesses as well as the new wheat starch plant in Zeitz, Germany.
Key figures for the special products segment
Revenues and operating result
The special products segment's revenues rose slightly from € 1,791 to 1,819 million. The increase was driven by the startup of the wheat starch plant at the Zeitz site and especially steady volume growth. The higher revenues more than offset declining sales income, caused in part by currency exchange factors. The depreciation of the British pound following the BREXIT vote had a direct negative impact on a number of the segment’s companies.
The operating result came in at € 184 (171) million, higher still than last year's already excellent numbers. The continued volume growth in almost all business units was enough to offset the burden resulting from the startup of the starch plant in Zeitz and declining sales income.
Result of restructuring and special items
The result of restructuring and special items of € -4 (-2) million included expenses from the testing phase of the new wheat starch plant at the Zeitz location until July 2016. Last year, expenses related to the wheat starch plant testing that began in 2015/16 were offset in part by property tax reimbursements for previous years at BENEO.
Result from companies consolidated at equity
The result of € 28 (23) million from companies consolidated at equity is mainly attributable to the share of earnings from Hungrana Group's starch and bioethanol businesses.
Capital Employed and Return on Capital Employed (ROCE)
Capital employed rose significantly to € 1,499 (1,436) million due to higher investments. The higher operating result of € 184 (171) million caused ROCE to rise to 12.2 (11.9) %. The capital employed number also includes the investments for the wheat starch plant at the Zeitz location.
The special products segment invested € 126 (131) million. The BENEO division's investments were mainly for efficiency improvements in the production process at Orafti in Oreye, Belgium, and the agglomerations system at Palatinit in Offstein. The starch division's main investments were for the construction and startup of the wheat starch plant in Zeitz and a capacity expansion in Aschach, Austria. The Freiberger division focused its investments on improving efficiencies by installing new production systems at the Berlin and Westhoughton, Great Britain, sites.
BENEO was able to successfully increase its market share in fiscal 2016/17, growing significantly in all its key markets. The division is focusing on the European market and the potential of the American and Asian markets. For example, it established a sales office in India in order to expand into this important economic region.
Freiberger Group was able to meet expectations for the fiscal year just ended, despite rising milk prices and the weakening of the British pound. By focusing consistently on product quality in Germany, Freiberger was able to counter the market trend and generate the same volume as last year. Volume rose in France and Great Britain. Freiberger will therefore stick to its quality and investment strategy and align its production capacities on the special requirements of the retail trade as well as taking into consideration consumer behavioral trends in determining its product types and production concepts.
PortionPack Europe operated in a continued difficult market environment in fiscal 2016/17. A restructuring initiative in Belgium at the beginning of the fiscal year led to the sale of the production side of the business, and retention of the business with food service customers as a pure trading business. Because of sharply lower sales revenues - expressed in euro - in England, and reduced business volume in Belgium, PortionPack Europe Group's revenues were below last year’s.
The starch division's revenues rose 1.7 % in fiscal 2016/17. The sales volume of products manufactured in-house rose because of the significantly improved productivity at all factories. Market prices for the significantly higher volumes remained stable, especially for native starches. Ethanol prices were very volatile during the fiscal year and average prices for bioethanol were below last year's. However, because of higher sales volumes, revenues remained almost constant. Volume and prices for the modified starches product group remained stable. The specialty product strategy focus resulted in significantly higher revenues for high-margin organic products, both because of higher volumes and higher selling prices. Sugar price trends in Europe had a positive impact on selling prices for sweeteners and as a result, revenues, driven in part by higher volumes, were above last year's.
After one-and-a-half years of construction, testing at the Zeitz starch plant began in March 2016. The plant started operations in July 2016. It will convert wheat from the surrounding area to glucose syrups for the food and chemical industries and has generated jobs for about 100 new employees. Bran for the animal feed industry and the plant protein gluten will be refined in addition to the primary product, glucose syrup. Gluten is a key raw material also used for the baked goods industry and fish farming. A large volume of bran from the newly started up wheat starch plant in Zeitz was sold for the first time in Germany and abroad. Contract terms and conditions were excellent.