Nordzucker to enter sugar cane business
June 28, 2019 at 10:42 AM ,
Der AUDITOR
Subsidies are a political challenge
As Dr Lars Gorissen, CEO of the Nordzucker AG has outlined at the Annual General Meeting the extreme price erosion for sugar in the EU and in the world market is driven by overproduction and the political environment. Sugar production is not only subsidised in India and Thailand but also in several EU countries, which distorts competition. Gorissen in fact sees the company confronted with a political challenge and highlights the uncertain current market situation in explaining that “[a]t this price level, hardly anyone can supply sugar at a cost-covering level.” Nordzucker completed the financial year with a net loss of minus EUR 36 million at EUR 82 million.
Nordzucker intends to enter the sugar cane industry
At the same time, Gorissen, however, also emphasises that sugar has a future. “Demand is raising continuously worldwide. Sugar is also an important ingredient in food and not easy to replace. We expect prices to rise in the medium term and are clearly focusing on sugar – from sugar beet and sugar cane.”
This statement marks the transformation process the company is currently undergoing to combat the current market situation. Nordzucker plans to complete transactions with Mackay Sugar Limited, Australia’s second largest sugar producer, soon. This will enable the company to enter Australia’s sugar cane market and to gain access to Asia.
Comprehensive measures have also been introduced in Europe. The sugar giant is cutting costs in administration and core processes and intend to adjust the product and service portfolio to improve the sales strategy. Jochen Johannes Juister, Chairman of the Supervisory Board supports the company’s plans for the future and confirms that “[t]he prospects for sugar remain good.” Norzucker received approval for its course of action at the AGM.
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