Südzucker raises earnings forecast further following excellent third quarter results
Südzucker AG generated a significantly higher group consolidated operating result of EUR 327 (previous year: 198) million in the first three quarters of fiscal 2016/17 (1 March 2016 to 30 November 2016). Group consolidated revenues declined slightly to EUR 4,905 (previous year: 4,949) million. The higher result was mainly attributable to the sugar segment, but the fruit and special products segments also contributed. The CropEnergies segment’s operating result fell in the third quarter and is thus now lower than last year, but continues to be high.
Südzucker boosts results outlook for fiscal 2016/17
For the full fiscal 2016/17, Südzucker continues to forecast group consolidated revenues of EUR 6.4 to 6.6 (previous year: 6.4) billion. The sugar segment, and now also the special products segment, are expected to generate revenues comparable to last year. The CropEnergies segment's revenues are now expected to come in at between EUR 685 and EUR 715 (previous year: 658) million. The fruit segment's revenues are expected to rise sharply.
The group's consolidated operating result is now expected to range between EUR 380 and EUR 410 (previous year: 241) million, driven mainly by improved sugar segment results. A positive result ranging between EUR 90 and EUR 120 million is now expected, following last year's negative result of EUR -79 million. The special products segment's result is now forecast at about EUR 160 (previous year: 171) million. Südzucker now expects the CropEnergies segment's result to range between EUR 70 and EUR 85 (previous year: 87) million. The fruit segment's result forecast remains unchanged; higher than last year's EUR 62 million.
Sugar segment's result continues to be positive and trends higher in the third quarter
The sugar segment's revenues declined to EUR 2,143 (previous year: 2,264) million in the first three quarters of the current fiscal year. The drop is mainly due to lower quota sugar volumes and reduced non-quota sugar volumes resulting from the weaker 2015 harvest. It was offset by rising sugar sales revenues, which outpaced the volume decline in the third quarter.
The segment was able to generate an operating profit of EUR 77 million after last year's EUR -39 million loss. The main driver is increased quota sugar sales revenues. A moderate price rise that started in October 2015 initially impacted the beginning of the fiscal year; as it progressed, spot market sales revenues also continued to rise in an overall favorable market environment, which has now positively impacted all markets since October 2016.
Beet cultivation and 2016 processing campaign
In all regions apart from Belgium and France favorable weather conditions held right into the summer of 2016. Therefore Südzucker Group's beet yields were generally above average at around 75 (previous year: 69) tonnes of beets per hectare. The average campaign duration for Südzucker Group's sugar factories is expected to be about 106 (previous year: 89) days. European minimum beet price and production quota regulations were applied for the last time at the end of 2016 campaign. They expire at the end of September 2017. In order to be able to more flexibly respond to the pending altered business conditions, beet growers and Südzucker jointly revised and simplified their contractual and payment system in an effort to ensure that it is fair, balances the interests of both parties, and keeps raw material supplies sustainable and competitive.
Special products segment's revenues and operating result rise slightly due to higher volumes
The special products segment was able to grow revenues to EUR 1,372 (previous year: 1,355) million. The overall positive volume trend – driven in part by exchange rate factors – was offset by weaker sales revenues. The operating result for the first three quarters rose to EUR 133 (previous year: 127) million; however, as expected, the third quarter result of EUR 46 (previous year: 53) million fell short of last year's unusually strong third quarter result. With the exception of the starch division, which had to contend with startup related operating losses from the Zeitz starch plant commissioning, all of the segment's divisions reported results that were the same as or higher than the previous year.
CropEnergies segment's result declines slightly
Thanks to substantial growth in the third quarter, the CropEnergies segment’s revenues of EUR 507 (previous year: 506) million after nine months are now comparable to last year. The division was able to offset significantly lower ethanol sales revenues and lower trading volumes by higher production and sales volumes – especially at the restarted factory in Wilton, Great Britain. Operating profit came in at EUR 60 (previous year: 63) million, also slightly under last year's high result. This shortfall was mainly attributable to the significant decline in ethanol sales revenues. Expanded production and sales volumes and lower net raw material and energy costs were not enough to completely offset the lower income.
Fruit segment earnings and revenues climb
The fruit segment was able to boost revenues to EUR 883 (previous year: 824) million in the first nine months. This was thanks to a significant recovery in the fruit juice concentrates division’s sales revenues, in addition to the fruit preparations division’s continued volume growth. The operating result also rose, to EUR 57 (previous year: 47) million. While the fruit preparations division benefited from the continuing volume growth, the fruit juice concentrates division’s margins recovered thanks to higher sales revenues.