Suedzucker Lifts Earnings Hope, as European Sugar Prices Rally

(Agrimoney) – Rising European sugar prices helped Suedzucker, Europe’s largest sugar refiner, to boost its profits, and prompted an upgrade to earnings hopes, sending shares to Suedzucker lifted its forecast for group operating profit over the year to the end of February 2017 to E380-410m, up from an earlier forecast of E340-390m.

And the company expects its sugar segment to turn a profit of E90-120m over same period, up from previous guidance of E80-110m, and compared to a loss last year.

Falling sales…

Suedzucker reported rising earnings from its sugar business, despite lower volumes and earnings, thanks to booming prices.

The company’s sugar segment’s revenues declined some 5.3%, to E2,143 in the nine months to November 30.

“The drop is mainly due to lower quota sugar volumes and reduced non-quota sugar volumes resulting from the weaker 2015 harvest,” Suedzucker said.

…but rising profits

But earnings rose, thanks to rising prices of sugar within the EU sugar system, generating an operating profit of E77m after last year’s E-39m loss.”

“The main driver is increased quota sugar sales revenues,” said Suedzucker.

“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 favourable market environment, which has now positively impacted all markets since October 2016.”

“According to EU price reporting, the average price for quota sugar rose by October 2016, to E470 a tonne for bulk sugar compared to last year’s prices stagnating at low levels,” Suedzucker said.

Suedzucker increased its area under cultivation in the 2016 campaign, “in response to the low 2015 harvest”.

Shares rally

Across the company, Suedzucker reported operating profits up 47%, to E133m, for the three months to November.

Sales rose 5.1% over the same period, to E1.79bn.

This compares to analyst expectations of E51.7m profits, at sales of E1.74bn.

Suedzucker shares in Frankfurt were up 2.8% in afternoon deals, at E24.0850.