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Südzucker: low EU prices fail to cover costs

October 10, 2019 at 1:20 PM , Der AUDITOR
38,000 farmers supply Südzucker with sugar beets @Gerald Schilling, Südzucker AG
38,000 farmers supply Südzucker with sugar beets @Gerald Schilling, Südzucker AG
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MANNHEIM. As the sugar giant Südzucker has recently announced in its recently issued press release the consolidated group operating result has declined considerably to EUR 74 million between March and August. Last year’s operating result stood much higher at EUR 139 million. The loss is mainly driven by the sugar segment.

Prices set to remain low

In the first six months of MY 2019/2020 the revenues in the sugar segment declined drastically to EUR 1.121 million. Contrary to this, revenues ranged much higher last year at EUR 1.389 million. This loss is in line with expectations. As Südzucker explains the low sugar price levels in the EU by no means covered costs and the drought related reduction in supplies cut back sales volumes. In addition, the sugar giant does not expect a recovery in the full MY 2019/2020. Although the global production deficit is expected to grow, the sugar prices in the world market should remain low as India is expected to export as much as 6 million tonnes. They have a noted impact in the sugar market prices in the EU.

Drought and heat have also impacted sugar beet production in most regions, in which Südzucker is active. Yields are expected to be below average. The campaign started on 21 August and should last 105 days. Last year the campaign lasted 115 days. Südzucker intends to produce 4.45 million tonnes of sugar from 28.1 million tonnes of sugar beets. This is a decline from last year’s 4.62 million tonnes of sugar produced from 29.3 million tonnes of sugar beets.

Drastic cut in revenues expected

The Group has mainly confirmed its forecasts for the fiscal year 2019/2020 as consolidated group revenues are to range at EUR 6.7 to 7.0 billion. Last year’s revenues amounted to EUR 6.8 billion. The losses in the sugar and fruit segments are to be compensated by higher revenues in the CropEnergies and special product segment. The sugar segment is expected to witness an operating loss of EUR – 200 to -300 million. Last year the loss amounted to -239 million.


Press release Südzucker AG (10 October 2019)

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