Nordzucker: Significant losses in 2018/19
October 16, 2018 at 11:01 AM ,
Der AUDITOR
The Nordzucker Group generated revenues of EUR 689.6 million in the first six months of the fiscal year 2018/19. This was 18 % down on the same period last year (EUR 845.5 million). At the same time, the company achieved a significantly lower profit for the period of EUR 11.6 million (prior: EUR 87.7 million).
The main reason for the decline is the significant drop in selling prices for sugar. There has been an overproduction on the European sugar market since the abolition of the quota system. According to EU price reports, sugar prices have sharply declined by more than EUR 140 per mt since October 2017 and are now at an all-time low. Slightly higher sales volumes of by-products and bioethanol only marginally offset the decline in revenues. Only the lower production costs and positive one-off effects led to a slightly positive result.
The world market price for sugar has also dropped to the lowest level in ten years. This development was primarily triggered by increases in production in India and Thailand. A substantial production increase is also expected for India next year. This will add pressure to the world market prices. Sugar production in India is heavily subsidised.
Outlook
This year's harvest and beet processing, which began in mid-September, is dominated by the effects of the unusually dry weather. The campaign was therefore launched later in many regions and is expected to end in January. Large regional differences in yields are expected. Nordzucker expects overall sugar yields to be below average.
Due to the low sugar prices, the Nordzucker Group can no longer prevent a loss in the current financial year. For the following year 2019/20, an even greater loss must be expected in view of the expected price level.
"We believe that we generally are in a good position, even if the market situation is serious. The extent of the fall in prices on the world market, driven by the subsidised sugar market in India, presents major challenges. We will continue to significantly increase our efficiency and optimise processes and structures," explains CEO Dr Lars Gorissen.
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