Suedzucker sees drop in earnings on high costs, low prices (updated)

Suedzucker AG

16/05/2024 11:48

(Adds CEO comment in press conference)
       HAMBURG, May 16 (Reuters) - Europe's largest sugar
producer Suedzucker  SZUG.DE  expects lower annual earnings
largely because of high production costs and weak sugar prices,
it said on Thursday.
    The German company affirmed a forecast made on April 15 that
its fiscal 2024/25 group operating profit would fall to between
500 million and 600 million euros ($544 million to $652 million)
from 950 million in the year that ended in February.
    The operating result in its core sugar segment is expected
to be between 200 million and 300 million euros, down from 558
million, it said.
    "For the 2024 (production) campaign, we expect a decrease in
production costs," the company said. "However, the anticipated
decline in sugar prices on average over the fiscal year is
likely to have a negative impact on the result."
    Sugar futures hit 18-month lows on Tuesday on expectations
of high sugar harvests in Brazil.
    CEO Niels Poerksen told Reuters after an online press
conference that the world 2023/24 season sugar market was
expected to have a larger supply surplus than the previous
season, with production increases expected in Brazil and the EU.
This could weaken prices.
    However, the pressure from rising sugar production costs was
expected to reduce.
    EU sugar demand remains stable overall, he added.
    Suedzucker's bioethanol sector faces challenges from low
ethanol prices despite strong demand, partly because of
continued imports to the EU.
    "The ongoing war in Ukraine continues to exacerbate the
already high volatility on the sales and procurement markets,"
Suedzucker said. "The future impact of the negative influences
stemming from the EU’s extended duty-free access for
agricultural imports from Ukraine, which is now limited in terms
of volume, remains uncertain."
    "The implications of the war that broke out in the Middle
East last October are likewise difficult to assess."

 (Reporting by Michael Hogan; Editing by Jason Neely and Mark
Potter
)
 ((michael.j.hogan@thomsonreuters.com; +49 172 671 36 54;
Reuters Messaging:
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