Südzucker posts record revenues and earnings
Südzucker AG Mannheim/Ochsenfurt, Mannheim, reported consolidated group revenues that were up 14 percent to EUR 7.0 (previous year: 6.2) billion in financial year 2011/12 (March 1, 2011 to February 29, 2012), while operating profit jumped 44 percent to EUR 751 (previous year: 521) million. Both were new record highs in the company's history. All segments contributed to the rise in consolidated group revenues. The sharp profit improvement was mainly driven by higher sales revenues in the sugar segment. The special products and CropEnergies segments also reported higher operating profits. The fruit segment's profits were lower.
The executive and supervisory boards will recommend to shareholders at the annual general meeting on July 19, 2012 that a resolution be passed approving distribution of a dividend of EUR 0.70 (previous year: 0.55) per share. The recommendation reflects the significantly higher profits. Based on the 189.4 million bearer shares in circulation, the total dividend distribution will be EUR 132.6 (previous year: 104.1) million.
Sugar segment profit up sharply
The sugar segment's operating profit rose to EUR 511 (previous year: 285) million and drove the group's profit growth. Revenues also rose sharply, to EUR 3,728 (previous year: 3,279) million. This was driven by the rise in sugar sales, revenues both in the European sugar market and the global market, while volumes declined slightly from the previous year's high level. Because the EU is a net importer, higher world market prices also impacted the European Union's market price level. Due to continuing high and volatile world market price levels, sugar sales revenues initially rose in Eastern Europe and later throughout the entire EU. Sales revenues from exports to the world market were also higher due to the high world market price level. As a result, the impact of declining sugar volumes and sharply higher commodity prices was offset by a wide margin.
Because of the expected high beet volume, the 2011 campaign started early. The average campaign duration per factory at Südzucker Group was 123 (previous year: 103) days, much longer than last year. Harvest conditions were ideal in almost all farming areas and as a result, the harvest was already completed by the end of November 2011. The mild weather until mid to end of January 2012 enabled trouble-free beet transportation to the factories.
In total, about 31.3 (previous year: 26.1) million tonnes of beets were harvested from about 412,000 (previous year: 388,000) hectares of land and about 4.9 (previous year: 3.9) million tonnes of sugar were extracted from the beets. About 500,000 (prior year: 300,000) tonnes of raw sugar cane were refined, bringing the total volume of sugar produced to 5.4 (previous year: 4.2) million tonnes.
ED&F Man share participation still subject to approval by the antitrust authorities
In order to further expand its sugar business outside Europe, Südzucker is aiming to acquire a stake of twenty-five percent minus one share in British commodities trading company ED&F Man, London, as part of a capital increase. ED&F Man is a leading international dealer in agricultural commodities such as sugar, coffee and molasses. In the sugar trade, ED&F Man is the world's second-largest dealer and handled about 8.8 million tonnes in 2011. ED&F Man also holds majority and minority interests in production and refining operations.
The transaction is still subject to approval by the antitrust authorities. The deadline for the commission's decision is May 22, 2012.
Special products segment impacted by higher commodity prices
The special product segment's growth was above all influenced by substantially higher commodity prices, which could only be partially passed on to the market. The segment's revenues rose to EUR 1,806 (previous year: 1,575) million in financial year 2011/12. Contrary to the original forecast, operating profit was higher than the prior year's excellent result, coming in at EUR 149 (previous year: 144) million. The starch division, with continued high volume at higher sales revenues, was the major contributor. The other divisions were not quite as successful at passing on higher commodity costs to the market. Higher prices and higher volumes were thus not enough to fully offset the higher costs.
CropEnergies segment continues to grow
The CropEnergies segment generated revenues of EUR 529 (previous year: 437) million. Both higher bioethanol sales revenues and other volume and sales revenue increases for byproducts (animal feed, for example) contributed to the increase.
The segment was able to improve operating profit again, to EUR 53 (previous year: 46) million, a new high. The improvement was driven by higher production and sales of byproducts, as well as higher income from the products. On the other hand, higher costs driven by price increases in the grain markets were mitigated by early price hedging and optimization of raw material utilization. A newly founded company in Houston, Texas expands CropEnergies' dealer network and strengthens its market position.
Fruit segment only able to partially offset rising commodity prices
The fruit segment's revenues during the reporting period were higher than last year at EUR 929 (previous year: 870) million. Revenues increased despite lower volumes thanks to higher income. Operating profit also rose, driven by higher commodity costs.
The fruit segment's operating profit did not reach the same level as last year, coming in at EUR 38 (previous year: 46) million. While better margins on fruit juice concentrates were able to offset the declining volumes for fruit juice concentrates and fruit preparations in the first half of the year, the same was not possible in the second half as commodity prices rose further.
Number of employees almost unchanged
The average number of persons employed by Südzucker Group in financial year 2011/12 was almost unchanged at 17,489 (previous year: 17,658). The fruit segment reported a decline to 4,822 (previous year: 5,118), which was offset by a slight increase in the special products segment to 4,381 (previous year: 4,259) and CropEnergies to 310 (previous year: 303). The size of the sugar segment's workforce stayed the same.
Results for current financial year expected to be slightly higher
During the current 2012/13 financial year, all segments are expected to generate higher revenues and thus consolidated revenues to rise slightly to over EUR 7 billion. We expect operating profit to rise to over EUR 800 million, most of which will come from the sugar segment. The special products segment is expected to repeat the strong results posted in financial year 2011/12 and CropEnergies to match last year's record profits despite a rather slow start to the year. We expect the fruit segment's operating profit to improve slightly. The fruit juice concentrates division's joint venture with Ybbstaler Fruit Austria GmbH will generate additional growth. The deal is expected to close in the second quarter of 2012/13.