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Fiscal year 2016/17

Sugar segment

Performance of the sugar segment

The sugar segment's numbers relate to Südzucker AG, Südzucker Polska, Südzucker Moldova, Raffinerie Tirlemontoise, Saint Louis Sucre and AGRANA. These companies produced 4.7 (4.2) million tonnes of sugar in 29 sugar factories and two refineries. The plants are located in Germany, Belgium, Bosnia-Herzegovina, France, Moldova, Poland, Austria, Romania, Slovakia, the Czech Republic and Hungary. The agriculture, animal feed and Bodengesundheitsdienst divisions are some of the other business units attached to the segment.

Key figures for the sugar segment

RevenuesEUR million2,7762,855
EBITDAEUR million20148
Depreciation of fixed assets and intangible assetsEUR million-129-127
Operating profitEUR million72-79
Restructuring/special itemsEUR million-124
Income from companies consolidated at equityEUR million732
Income from operationsEUR million67-43
EBITDA margin%7.31.7
Operating margin%2.6-2.7
Investments in fixed assetsEUR million153181
Investments in financial assets/acquisitionsEUR million1180
Total investmentsEUR million271181
Capital employedEUR million3,1693,041
Return on capital employed%2.3-2.6

Revenues and operating profit

The sugar segment’s revenues declined to € 2,776 (2,855) million, due especially to lower quota sugar volumes, but also falling non-quota sugar volumes because of the weaker harvest in 2015. Rising sugar sales revenues over the course of the fiscal year more than offset the lower volumes during the second half of the year.
The operating result improved substantially, to € 72 (-79) million, driven mainly by higher quota sugar sales revenues. At the beginning of the fiscal year, the moderate price increase since the beginning of the 2015/16 sugar marketing year in October 2015 had an initial impact. In addition, over the course of the year, spot market income continued to rise in an overall positive market environment. This has now boosted all markets since October 2016.
Result of restructuring and special items
The result from restructuring and special items of € -12 (4) million covers mainly expenses related to the new partial retirement program Südzucker AG began offering at the end of fiscal 2016/17 and value added tax risks at AGRANA Romania S.A. Last year this item contained proceeds from the reimbursement claim against the EU for excess production levies imposed for sugar marketing years 2001/02 to 2005/06.
Result from companies consolidated at equity
The sugar segment’s result for companies consolidated at equity was € 7 (32) million and relates to ED&F Man Holdings Limited, London, Great Britain, AGRANA-Studen Group and Maxi S.r.l. Last year's statements included an acquisition profit from ED&F Man’s first-time full consolidation of Empresas Iansa S.A., Santiago, Chile, after ED&F Man was able to boost its share of the company to a majority interest of about 92 %.
Capital employed and return on capital employed
Capital employed rose to € 3,169 (3,041) million, driven especially by higher sugar inventories and trade receivables. ROCE was back in positive territory at 2.3 (-2.6) % thanks to the operating profit of € 72 (-79) million.
Investments in fixed assets
Investments in fixed assets of € 153 (181) million were primarily for replacements, investments to improve efficiencies such for the beet yard and beet cleaning projects in Roye and Etrépagny, both in France, and product developments such as nibs sugar in Tienen, Belgium and jam sugar concentrate in Rain. Other important investments were for energy savings; for example, the steam turbine in Zeitz, which uses the required process steam to generate electric power, as well as environment-related investments for wastewater treatment and exhaust gas scrubbing systems at locations such as Cagny, France, and Tienen, Belgium. Also worth mentioning are logistics and infrastructure projects such as the ones at the Plattling, Rain, Offenau and Offstein factories, as well as in Tienen, Belgium. Many of these projects are key to conducting longer campaigns, which are planned after expiry of the minimum beet price regulations and quotas on 30 September 2017.
Investments in financial assets
Investments in financial assets related mainly to the 10 % increase interest in the trading company ED&F Man Holdings Ltd., London, to about 35 % in September 2016, the purchase of 100 % of the shares of Terra e.G., Sömmerda, in June 2016, and the prorated capital increase in the interest in AGRANA-Studen Group.