Suedzucker posts Q2 profit slump, cuts FY outlook on weak sugar market (updated)

Suedzucker AG

10/10/2024 07:06

(Adds details on market, harvest outlook)
       HAMBURG, Oct 10 (Reuters) - Europe's largest sugar
producer Suedzucker  SZUG.DE  on Thursday reported a 63% fall in
quarterly operating profit and cut its full-year earnings
forecasts on weak sugar markets.
    Suedzucker reported operating profit of 114 million euros 
($124.70 million) in the second quarter to Aug. 31 of its
2024/25 fiscal year, down from 310 million euros in the same
quarter last year. 
    The company warned in September that its second-quarter
earnings would decline following unexpectedly sharp
deteriorations in market expectations for its core sugar sector.
    On Thursday it confirmed the September warning and said the
group profit in the 2024/25 fiscal year will fall to between 175
and 275 million euros from the previous forecast of 500 to 600
million euros. Suedzucker reported a profit of 947 million last
fiscal year.
        Improved sugar beet harvest expectations around Europe
in the current 2024 sugar crop processing campaign are
increasing volumes of sugar offered for sale in the European
market, it said.
    EU sugar prices peaked at 856 euros a metric ton in December
2023, falling to 775 euros/ton in July 2024, it said.
        The reported spot price level is now well below this
average after expanded cultivation and good harvest expectations
for the 2024 crop, the company said.
        Suedzucker, which also has interests ranging from
biofuels to processed foods, expects full-year operating losses
in its sugar sector between 50 and 150 million euros.
  
        “The downward trend in EU price levels has since
accelerated substantially in recent weeks, leading to an
unexpected deterioration in market conditions,” Suedzucker said.
  
        “A higher EU harvest expectation from the current 2024
processing campaign with a correspondingly higher sugar volume
of the European market and a significantly lower global sugar
market price are the reasons for the downturn.”
  
        The company also expects sugar production costs to rise,
which can only be passed to customers with delays.
  

 (Reporting by Michael Hogan in Hamburg and Bartosz Dabrowski in
Gdansk, Editing by Miranda Murray and Eileen Soreng)
 ((michael.j.hogan@thomsonreuters.com; +49 172 671 36 54;
Reuters Messaging:
michael.hogan.thomsonreuters.com@reuters.net))