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Mannheim, 2005-05-25

Südzucker raises dividends

Südzucker Group continued its success story in 2004/05. Group revenues increased by 5.5 % to EUR 4.8 billion (EUR 4.6 billion)* and operating profit grew even further, by 9.2 % to EUR 523 million (EUR 479 million).
Revenues for the sugar segment grew by 3.6 % to EUR 3.5 billion (EUR 3.4 billion) and operating profit increased by 7.7 % to EUR 360 million (EUR 335 million) despite the EU commission not making temporary reduction in quotas. This growth in sales and operating profit is mainly attributable to the success of the eastern European sugar companies.
Turnover in the special products segment rose by 11.0 % to EUR 1.3 billion (EUR 1.2 billion) and operating profit grew by 12.5 % to EUR 163 million (EUR 144 million).
Due to these positive factors, the group»s operating margin rose to 10.8 % (10.5 %). Following the substantial volume of capital expenditures despite the increase in profits, return on capital employed (ROCE) amounted to 11.3 % (11.7 %). Net earnings for the year rose by 16.3 % to EUR 358 million (EUR 307 million) and earnings per share to EUR 1.73 (EUR 1.48). This positive development is also reflected in the recommended dividend of EUR 0.55 per share.
2004/05 was not only a good year for financial results, but was also a year in which the group prepared for the recommendations to change the EU sugar market regulation. We have used this foreseeable change to concentrate our efforts even more on the structures, opportunities and challenges of our markets. Thanks to its strengths and resources, our group is in a position to successfully counter the pressures imposed on it.
Südzucker´s strength is its growth portfolio
Südzuckers´ strength lies in the fact that it is a broadly-based group with a magnificent growth portfolio, which it is successfully expanding with an investment offensive exceeding EUR 2 billion in the last three years alone. In the sugar segment, Südzucker concentrates on maximizing its competitive raw material base, extending European market leadership and cementing our position by concentrating on quality and service. In the functional food segment, Südzucker is rigorously expanding its position on global markets, particularly by customer-oriented innovation, using the trend towards high quality wellness products. This also applies to the successful expansion of Südzuckers global fruit segment. By commencing production of bioethanol, Südzucker is also securing its participation in a forward-looking market with high growth potential. The Zeitz plant, which commenced operations in 2005, is the largest and most modern of its kind in Europe. A similar plant will come on stream in Austria in 2007.
Sugar production over 5 million tonnes
The total area of sugar beet under cultivation for the Südzucker Group in 2004/05 was 495,200 hectares (498,800 hectares). With an average of 9.7 tonnes per hectare (8.4 tonnes per hectare) the sugar yield was sharply higher than for the previous year. In total, 4.80 million tonnes (4.17 million tonnes) of sugar was processed from 31.1 million tonnes (26.7 million tonnes) of sugar beet and, including the refinery of raw sugar, sugar production within the group reached 5.13 million tonnes (4.44 million tonnes). The higher sugar beet quantities and closure of seven factories (1 in Belgium, 6 in Poland) led to a campaign lasting 91 days (75 days) and thus to better plant utilisation.
The consolidated total sales volumes for all group companies amounted to 4,689,600 tonnes (4,746,000 tonnes) of sugar in 2004/05, almost at the same level as for the previous year. This is due on the one hand to a decline of 2.2 % in domestic sales compared with the previous year and, on the other hand, to an increase of 1.3 % in exports.
Further growth in 2005/06
Profitability in the sugar segment will again be negatively affected by unsatisfactory price developments for exports, particularly to countries outside the EU, in 2005/06. We estimate that there will be a reasonable declassification by the EU commission for the 2005 campaign, which will lead to relief for the market and the overall price situation.
Growth in revenues and operating profit in the special products segment will continue in 2005/06. Significant contributions to results will be achieved from the inclusion of Atys in the AGRANA fruit group. With the commencement of bioethanol production in early 2005, Südzucker will play a major role in the growth market of biological fuels as the largest German producer of ethanol. The profitability of the special products segment will benefit from this as the year progresses.