Südzucker confirms annual forecast
In the first three quarters of the current 2007/08 financial year (March 1 - November 30, 2007) group revenues of EUR 4.4 billion reached last year's level. The export-driven decrease in the sugar segment was offset by gains in the special products and fruit segments. Given developments in the sugar segment, the group's operating profit of EUR 176 (355) 1) million remained at approximately half of last year's figure. Due to the lower operating profit in the sugar segment and higher expenses related to restructuring and special items, the consolidated net earnings for the Group fell to EUR 66 (256) million. Earnings per share dropped to EUR 0.01 (1.02) / share.
Sugar segment in transition
In the sugar segment, revenues in the first nine months of the 2007/08 financial year declined to EUR 2,630 (2,808) million; operating profit came in at EUR 42 (234) million. In addition to the sustained factors arising from the new sugar market regulations, the third quarter was further affected by accruals of restructuring levy charges based on the preventive withdrawal of 13 % imposed by the EU Commission; in contrast, the first stage of the reduction in processing margins was offset by cost reductions.
Due to favourable growing conditions, sugar production at the 39 sugar production plants of the Südzucker Group in 2007/08 reached last year's levels - despite the reduction of the areas under cultivation in line with the preventive market withdrawals imposed by the EU - and came in at 4.6 million tonnes of sugar (incl. refining).
Positive trends at special products and fruit segment
Revenues in the special products segment rose by app. 12 % to EUR 1,081 (968) million tonnes, with growth originating primarily from the bioethanol and starch divisions. The growth in operating profits to EUR 104 (92) is also attributable to the favorable trend in the bioethanol and starch divisions. The newly formed BENEO division (Orafti, Remy, Palatinit), the Freiberger frozen foods group and PortionPack Europe performed in line with expectations. Profit growth was generated in the first two quarters of the current financial year; the third quarter, coming in at EUR 34 (38) million was not able to match these gains because of rising prices on the commodity (wheat and corn) markets.
Revenues in the fruit segment grew by 10 % to EUR 645 (584) million, with both areas- fruit preparations and fruit juice concentrates - able to record sales gains. Operating profit of EUR 31 (29) million grew at a rate of 5 % since favorable sales performance was partly offset by harvest-driven higher commodity prices.
Continuation of the restructuring process lowers results for 2007/08 financial year
Südzucker has raised its revenue forecast for the 2007/08 financial year from the previous range of between EUR 5.2 and 5.4 billion to now EUR 5.5 (5.8) billion. The decrease in revenues of up to EUR 300 million originates predominantly in the sugar segment, while the special products segment will contribute a gain in excess of EUR 100 million. The fruit segment is also expected to generate a substantial increase - on a comparable 12-months basis - but this will not reach the absolute number reported for the prior year, since the 2006/07 financial years of the acquired fruit companies covered a period of 14 months to accommodate the realignment of reporting periods.
As reported above, group´s operating profit is expected to drop substantially year-on-year; the current prognosis is unchanged at a minimum projected EUR 210 (419) million. Operating profit for the sugar segment is forecast to come in just in the positive range. In the special products segment Südzucker continues to expect that it will be able to exceed operating profit year-on-year, since the rise in commodity prices (especially for wheat and corn) as well as the elimination of the inuline fructose operations are more than offset by strong organic growth at the BENEO Group and bioethanol. Growth for the full year is expected to remain in the single-digit range. In the fruit segment, Südzucker also expects operating profit - on a comparable basis - to grow even in spite of higher commodity prices.
Südzucker AG Mannheim/Ochsenfurt
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1) The numbers in brackets relate to the prior year.