Südzucker increases result substantially in fiscal year just ended
Südzucker AG today confirms last fiscal year’s preliminary numbers released on 24 April 2017. Südzucker group consolidated revenues for fiscal 2016/17 (1 March 2016 to 28 February 2017) came in at EUR 6,476 (previous year: 6,387) million. The consolidated group operating result rose considerably to EUR 426 (previous year: 241) million during the same period. All segments contributed to the increase, but especially the sugar segment. Group consolidated net income climbed to EUR 312 (previous year: 181) million.
The executive and supervisory boards will recommend to shareholders at the annual general meeting on 20 July 2017 that a dividend of EUR 0.45 (previous year: 0.30) per share be paid for fiscal 2016/17. Based on 204.2 million shares in circulation, the total dividend distribution will be EUR 91.9 million. Last year the total distribution was EUR 61.3 million.
Sugar segment revenues fall but operating result clearly positive
The sugar segment’s revenues declined to EUR 2,776 (previous year: 2,855) million, due especially to lower quota sugar volumes, but also falling non-quota sugar volumes because of the weaker 2015 harvest. Rising sugar sales revenues over the course of the fiscal year more than offset the lower volumes starting the second half of the year.
The operating result improved substantially, to EUR 72 (previous year: -79) million, driven mainly by higher quota sugar sales revenues. Moderately rising prices since the beginning of October 2015 initially impacted the result at the beginning of the fiscal year. In addition, spot market income continued to rise in an overall positive market environment during the remainder of the year. This factor has now been driving all markets higher since October 2016.
Expanded cultivation area and better yields lead to higher sugar production levels
A significantly expanded cultivation area and an above average beet yield led to a higher total beet volume of 28.6 (previous year: 23.7) million tonnes in 2016/17. Production performance was almost the same as the year prior and the average campaign duration for all factories was 107 (previous year: 89) days. Thanks to mild, dry weather, the campaign progressed mostly problem free at all factories right into the winter months. Dry weather did hamper sugar beet pulling at some locations, which adversely affected factory deliveries, but only at the very start of the campaign.
The group’s total sugar production rose to 4.7 (previous year: 4.2) million tonnes, of which 4.4 (previous year: 3.8) million tonnes was sugar produced from beets and 0.23 (previous year: 0.43) million tonnes sugar refined from raw sugar cane.
Special products segment's revenues and operating result higher
The special products segment's revenues rose from EUR 1,791 to 1,819 million. The increase was driven in part by the startup of the wheat starch plant at the Zeitz site, but above all, steady volume growth, so that declining sales income, caused in part by currency exchange factors, could be more than offset. Depreciation of the British pound following the BREXIT vote had a particularly negative impact on a number of the segment’s companies.
The operating result was up again, to EUR 184 (previous year: 171) million, even beating last year's exceptionally high number. The continued sales volume growth in almost all business units was higher than the adverse impact of the startup of the starch plant in Zeitz and declining sales income.
CropEnergies segment reports also higher revenues and operating result
The CropEnergies segment's revenues rose to EUR 726 (previous year: 658) million, driven mainly by higher bioethanol production volumes, as well as food and animal feed, as a result of the restart of the plant in Wilton. This more than offset the reduced trading volumes due to higher in-house production and lower ethanol sales revenues.
The division’s operating result again improved considerably despite declining ethanol sales revenues, beating last year's unusually strong result and hitting a record of EUR 98 (previous year: 87) million. Key drivers were sharply higher production and sales volumes and declining net raw material and energy costs.
Fruit segment benefits especially from higher sales revenues for fruit juice concentrates
The fruit segment's revenues rose to EUR 1,155 (previous year: 1,083) million. This increase was driven by slightly higher volumes, and especially higher sales revenues for apple juice concentrates.
The segment's operating result improved year over year, rising to EUR 72 (previous year: 62) million. This increase is due to higher sales revenues and margins, combined with volume growth in the fruit juice concentrates division. However, the positive impact of volume and sales revenue growth in the fruit preparations division was not enough to completely offset higher costs.
Workforce expands slightly
The number of persons employed by Südzucker Group as of 28 February 2017 was 16,908 (previous year: 16,486), up 2.6 percent from last year's record date. The special products segment's higher headcount was mostly attributable to the Freiberger and starch divisions. For example, over 200 new jobs were created at the British pizza factory in Westhoughton, as capacity utilization expanded. Campaign operations at the sugar factories and in parts of the special products segment, together with the seasonality of the fruit business, cause the size of the workforce to fluctuate over the course of the fiscal year.
Südzucker named favorite food products sector employer
In a survey titled "Deutschlands beste Arbeitgeber im Vergleich" [comparing Germany's best employers], conducted by the German news magazine FOCUS in cooperation with Statista GmbH and Kununu, Südzucker placed second in the "food and luxury items, animal feed and drugstore products, medical consumables" category. First place went to a company outside the food products sector. The evaluation considered the following parameters, among others: opinion of the company's own employees, opinion of other workers in the same sector and employer rating as captured by the kununu.com website.
Outlook for the current 2017/18 fiscal year
Südzucker is forecasting consolidated group revenues of EUR 6.7 to 7.0 billion (fiscal 2016/17: 6.5) for the current 2017/18 fiscal year (1 March 2017 to 28 February 2018). We expect the sugar and fruit segment’s revenues to increase moderately and the special products segment’s to rise slightly. Südzucker expects the CropEnergies segment's revenues to range between EUR 725 and 800 (fiscal 2016/17:726) million.
Südzucker expects the operating result to rise further. It should come in at between EUR 425 to 500 (fiscal 2016/17: 426) million, driven mainly by better sugar segment results. After the records set in 2016/17, the company expects a significant retreat in both the special products and CropEnergies segments. Südzucker expects a year-over-year increase in the fruit segment.