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Mannheim, 2009-05-27

Südzucker shows strength during crisis

Overall, Südzucker Group's long-range business model has demonstrated strength even during periods of structural upheaval and economic weakness. In spite of the cuts in the sugar segment driven by the new sugar market regulation, the global turbulence in agricultural markets, and last but not least, the financial and economic crisis, Südzucker was able to improve group revenues by almost two percent to 5.87 (5.78) billion euro and boost group operating profit by about eleven percent to 258 (233) million euro.

Mannheim, 2009-05-27

Südzucker shows strength during crisis

Overall, Südzucker Group's long-range business model has demonstrated strength even during periods of structural upheaval and economic weakness. In spite of the cuts in the sugar segment driven by the new sugar market regulation, the global turbulence in agricultural markets, and last but not least, the financial and economic crisis, Südzucker was able to improve group revenues by almost two percent to 5.87 (5.78) billion euro and boost group operating profit by about eleven percent to 258 (233) million euro. The operating profit improvement came primarily from the sugar segment.Income from operations rose 156 million euro to 345 (189) million euro. The positive contribution of 88 (-44) million euro from restructuring and special items was a significant factor. Earnings per share rose to 0.86 (0.10) euro per share and include the one-time effect from the EU restructuring assistance associated with the sugar quota return during the second wave in March 2008.Cash flow reached 504 (498) million euro and investments in fixed assets (including intangible assets) fell to 384 (497) million euro. The increase in net financial debt to 1,633 (1,508) million euro resulted from the now completed bioethanol production capacity expansions and the unchanged interim high working capital financing requirements resulting from the sugar market regulation restructuring. With the 446 million euro EU restructuring assistance due in June 2009, net financial debt will be substantially lower. The unchanged equity ratio of 42 percent underscores the solid balance sheet.The executive and supervisory boards will recommend to the annual general meeting on July 21, 2009 that an unchanged dividend of 0.40 euro per share be handed out. The total amount distributed will therefore be 75.7 million euro, as it was in 2007/08.
The average size of the group's workforce fell to 17,939 (18,642) in financial 2008/09. The reduction of about 1,450 persons in the sugar segment was partially offset by the hiring of more than 700 employees in the growth segments special products, CropEnergies and fruit. Split by region, Germany had 4,141 (4,095) employees, while the remaining EU countries had 9,445 (10,315), Eastern Europe 1,869 (2,054) and other regions around the world 2,484 (2,178).
Sugar segment - organizational restructuring bears fruit
Südzucker Group conducts business in the sugar segment and has thirty sugar factories and three refineries. The plants are located in Germany, Belgium, France, Poland, Austria, Romania, Slovakia, the Czech Republic, Hungary, Bosnia and Moldova. Südzucker is by far the largest sugar producer in Europe. The total volume of 4.2 (4.6) million tonnes of sugar the company made represents 24 percent of the EU's sugar quota. As a result of the quota returns, revenues declined to 3,320 (3,464) million euro. Operating profit increased to 137 (60) million euro, mainly because sugar inventory write-offs on February 28, 2009 were considerably lower than those that had been required during the quota return phase in 2008. The missing profits due to the quota returns have been offset by cost savings resulting from plant closures and cost reduction measures, plus the fact that sugar quota write-offs have now been eliminated.
Special products segment - revenues grow 11 percent
The special products segment includes the activities of BENEO-Group's (BENEO-Orafti/BENEO-Palatinit/BENEO-Remy), Freiberger and PortionPack Europe, as well as AGRANA's starch and bioethanol business. The segment's revenues rose to 1,427 (1,283) million euro, mainly due to contributions by the bioethanol plant started up in Pischelsdorf, Austria, in June 2008 and by the starch division. The Freiberger, BENEO-Group and PortionPack Europe divisions were also able to report higher sales and revenues. The operating profit of 108 (107) million euro was impacted by higher energy costs, as well as investments spending in Hungary for the starch division and the commissioning of the bioethanol plant in Pischelsdorf.
CropEnergies segment - revenue jumps 78 percent
The new segment's mandate covers Südzucker Group's bioethanol businesses in Germany, Belgium and France. Revenues climbed 78 percent to 319 (180) million euro, and the segment was able to generate an operating profit of 18 (22) million euro in a difficult market environment. Even though commodity costs were significantly higher and income from ethanol declined, CropEnergies was able to limit the decline in profit through strong volume growth and cost advantages. Costs from commissioning the plant expansion in Zeitz and the new bioethanol facility in Wanze, Belgium had a negative impact.
Fruit segment - inventory write-downs continued to weigh on 2008/09 results
AGRANA's holding company is responsible for all fruit segment shareholdings in the fruit preparations and fruit juice concentrates areas. AGRANA has twenty-five production locations in nineteen countries for fruit preparations, ten European facilities for fruit juice concentrates and two joint-venture locations in China. Revenues fell to 805 (853) million euro because of the after-effects of the commodity price fluctuations during the previous financial year. The operating profit of - 5 (39) million euro was due to the dramatic drop in income from apple juice concentrates, which required a write-down of 32 million euro in the prior harvest's inventories, as well as a decline in fruit preparations sales caused by the economic situation.
Outlook
Group revenues for the current 2009/10 financial year are expected to come in at the same level as last year. There will be a further decline reported by the sugar segment, whereas the special products, CropEnergies and fruit segments will grow.
Südzucker continues to forecast a group operating profit of about 400 million euro. The restructuring phase of the EU sugar market will end during the 2009/10 financial year. The sugar segment will increasingly recover and it is expected that the special products, CropEnergies and fruit segments will grow despite the more difficult market environment.
In the financial year 2010/11 Südzucker expects all segments to have a positive development of revenues and operating profit.


2008/092007/08
Revenues and earnings


RevenuesEUR million5.8715.780
EBITDAEUR million489489
as % of revenues%8,3%8,5%
Operating profitEUR million258233
as % of revenues%4,4%4,0%
Net earnings for the yearEUR million183100




Cash flow and investments


Cash flowEUR million504498
Investments in fixed assets1EUR million384497
Investments in financial assetsEUR million4053
Total investmentsEUR million424550




Performance


Fixed assets1
2.6262.596
Goodwill
1.1241.104
Working capital
1.3371.431
Capital employedEUR million4.9235.005
ROCE%5,2%4,7%




Capital structure


Shareholders' equityEUR million3.2293.299
Equity ratio%41,9%41,7%
Asset cover%127,0%125,1%
Net financial debtEUR million1.6321.508




Earnings per shareEUR0,860,10
Dividend per EUR 1 shareEUR0,4020,40




Employees - group
17.93918.642
Employees - sugar segment
8.59810.043




Sugar production1,000 t4.2104.579
Sugar factories
3039
1 Including intangible assets/additional quota
² Proposed
Südzucker AG, Mannheim/Ochsenfurt
Corporate public relations department
Rainer Düll
Maximilianstrasse 10
68165 Mannheim
Phone: +49 621 421-205
Fax: +49 621 421-425
rainer.duell@suedzucker.de