News Sugar
Mutiny at Tereos in difficult sugar market
Things have been rumbling for months at the French sugar cooperative Tereos. Board members resigned because, in their view, financial mismanagement is being applied. The company is finding it difficult to maintain its position in the current market, which is directly felt by the French beet growers.
Tereos is the second largest sugar producer in the world after Südzucker. The French cooperative has invested heavily in expanding production capacity. Not only in France, but also elsewhere in the world. Thus it has become the third largest sugar producer in Brazil.
Large debts
Acquisitions and expansions have been financed with equity or bank loans. Debt is €2,35 billion, writes Reuters. The members, the French beet farmers, want different management. They have benefited little or not at all from the expansion and are now being hit by the low sugar prices.
Each region has its own representatives within Tereos. Last summer, 70 of the 172 regional members resigned in protest. In total, the cooperative has 12.000 members. New elections among members for the regional boards will follow this week. In addition, the members are informed of the situation, which was partly fueled by the fact that 3 board members resigned after internal rebellion.
2,35
billion sek
Tereos already made a loss last season and is expected to do so again in the 2018/2019 season. The income comes mainly from the production of sugar (50%) while the rest comes from starch, ethanol and sweeteners. It is therefore very sensitive to price falls on the sugar market.
Investor
One such strategy is to sell a minority share. The anonymous sources told Reuters that Nordzucker would be in talks with the company. Tereos mentions the problem that these negotiations are made more difficult by dissatisfaction among the members. This makes a deal unattractive to potential investors.
Tereos is not the only sugar company that is having a hard time keeping its head above water at current market prices. Südzucker, Nordzucker and Associated British Foods (Britsh Sugar) are also affected by prices, which are at their lowest level in 10 years. The sugar price is now around $350 per ton, while according to Tereos a price of $500 to $600 is needed to be profitable.
Niels van der Boom
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