Suedzucker raises earnings outlook on better ethanol demand; sugar still weak

CropEnergies AG

25/10/2019 15:03

By Michael Hogan
    HAMBURG, Oct 25 (Reuters) - Suedzucker  SZUG.DE , Europe's
largest sugar refiner, on Friday raised its forecast of
operating profits in its current financial year as environmental
concerns have boosted demand for biofuel ethanol enough to
partially offset weakness in the sugar sector that is slumping
due to a global glut of the sweetener.
    “We are seeing robust demand for bioethanol in several
European countries,” a Suedzucker spokesman said. “In the
current debate about protecting the climate, the message is
getting through that bioethanol is a good method of reducing CO2
and dust emissions in cities.”
    “We are hopeful this trend will continue. The sugar outlook
is improved slightly but unfortunately the overall sugar market
remains depressed."
    The company now expects group 2019/20 operating profits to
reach 50 million euros to 130 million euros ($55.50-$144.3
million) against its previous forecast of zero to 100 million
euros and 27 million euros operating profit in the previous
year.
    The main improvement will come from its CropEnergies
 CE2G.DE  bioethanol unit, now expected to achieve operating
profit of 70-90 million euros, up from its previous forecast of
50-75 million euros.
    Suedzucker now estimates its core sugar sector will post an
operating loss of 200-260 million euros against its previous
forecast of a loss of 200-300 million euros.
    “We have taken measures on cost reduction (in the sugar
sector) while we are seeing a moderate improvement in sugar spot
market prices in Europe which is being reflected in new
contracts we are signing,” the spokesman added.
    Europe’s sugar producers are still suffering from the double
blow of low sugar prices and European Union market
liberalisation that has exposed them to depressed world markets.
    Suedzucker also warned it would see "a significantly
negative impact" from business development of British commodity
trading company ED&F Man Holdings in which Suedzucker has a
shareholding of about 35%. 
    Suedzucker on Oct. 10 also posted a fall in earnings as
sugar prices remained depressed.  urn:newsml:reuters.com:*:nL5N26V0MR Germany's second
largest sugar refiner Nordzucker on Friday also posted a pre-tax
loss of 12 million euros in the first half of its 2019/20 fiscal
year.  urn:newsml:reuters.com:*:nL5N27A3RX
    The European Union liberalized its sugar market in 2017,
ending its system of guaranteed minimum prices and protected
production quotas. That gave European producers more freedom to
expand and export but left them exposed to collapsing world
prices.

($1 = 0.9009 euros)

 (Reporting by Michael Hogan, editing by David Gregorio)
 ((michael.j.hogan@thomsonreuters.com; +49 172 671 36 54;
Reuters Messaging:
michael.hogan.thomsonreuters.com@reuters.net))