Suedzucker posts higher Q3 profit despite sugar losses (updated)

CropEnergies AG

14/01/2020 07:24

(Adds detail, additional comment)
    HAMBURG, Jan 14 (Reuters) - Suedzucker  SZUG.DE , Europe's
largest sugar refiner, on Tuesday confirmed an improvement in
quarterly earnings as stronger bioethanol demand helped offset
continued losses from its sugar business.
    The company confirmed an operating profit of 39 million
euros ($43.43 million) in the third quarter to November 30
against an operating loss of 23 million euros a year earlier. 
    “The EU sugar market remains desolate with prices too low
for profitable production,” a Suedzucker spokesman said. “World
market prices are rising and we expect an improvement in EU
sugar prices but this could take around 18 months.”
    Suedzucker reaffirmed its December forecast for a 2019/20
consolidated group operating profit of between 70 million and
130 million euros against 27 million a year earlier.
 urn:newsml:reuters.com:*:nASN0001BY
    But low sugar prices mean it still expects a full year
operating loss in its sugar business of 200-260 million euros
following a loss of 239 million the previous year.
    The expected improvement in group results was largely due to
strong performances in bioethanol and special products, which
range from pizzas to starch, with the green fuel unit
Cropenergies  CE2G.DE  performing well.  urn:newsml:reuters.com:*:nFWN29G1ER
    Europe’s sugar producers are suffering from the double blow
of low sugar prices and EU market liberalisation which exposed
them to depressed world markets.
    Raw sugar prices hit 14-month highs in January but still
struggle to move far the 10-year lows seen in 2018 because of
large global sugar supplies.  urn:newsml:reuters.com:*:nL8N29C2OU
    EU prices in the third quarter were around 312 to 328 euros
a tonne, Suedzucker said, well below the 500 euros per tonne in
late 2017 just before the price collapse started.
    “World market sugar prices have increased recently following
forecasts of a production deficit,” the Suedzucker spokesman
said. “The EU will need to import sugar at higher world prices.”
    The current EU sugar beet crop is expected to be smaller
than the previous year following a hot 2019 summer, requiring
the EU to import.
    “But in the EU, sugar producers generally have long-term
sugar supply contracts of about a year. So European producers
will not feel immediate benefit from the stronger world market.
    “We are hopeful for a turnaround in the sugar sector but
this financial year will see continued losses from sugar
production because prices are simply too low,” the spokesman
said.
    Suedzucker in 2019 announced closures of sugar factories in
Germany, France and Poland.  urn:newsml:reuters.com:*:nL5N1ZT5VA  urn:newsml:reuters.com:*:nL8N27Y4TJ
    ($1 = 0.8981 euros)

 (Reporting by Michael Hogan; editing by Michelle Martin and
Jason Neely)
 ((michael.j.hogan@thomsonreuters.com; +49 172 671 36 54;
Reuters Messaging:
michael.hogan.thomsonreuters.com@reuters.net))