News Annual figures Cosun
Cosun aims for beet prices above €45 as standard
From 2025, food group Royal Cosun wants to pay a standard beet price of €45 or more per net ton of beet. To this end, the group has developed a new strategy, called Unlock 25, CEO Hans Meeuwis announced on Thursday at the presentation of the annual figures. Cosun has recorded a record turnover of almost €2021 billion in 2,3, but this is offset by a loss of €8 million.
The loss-making result of the cooperative company is mainly due to a write-down of the ingredients factory for pet food, part of Duynie in Cuijk. Underlying, all Cosun business units, including Beet Company, Aviko Potato and Sensus, presented better than in 2020. Meeuwis spoke of a 'turbulent year based on multiple dynamics'. He pointed out, among other things, the weather (the cold spring) that had an impact on the raw material supply for sugar beets and French fries potatoes, among other things, the continuing effects of the corona crisis last year and the large cost increases for energy. "The increases for energy are insane. That has a major impact on our business operations that we have to do something about."
Cosun's turnover is €2,29 billion. An increase of 13% compared to 2020. The increase is mainly in the volume (10%, approximately €200 million) and partly in the price (3%, approximately €50 million). Excluding the exceptional charges and the members' bonus in the beet price, Cosun's underlying result rose by 32% to €75 million. The impact of the corona crisis, inflation and special items are depressing profits over the past year, explains Meeuwis. Cosun has to recognize a loss of €32 million as an exceptional charge in the result. The largest cost item in this regard is a write-down of the assets of the factory of the ingredients factory Duynie in Cuijk, where raw materials are produced from potato residues and carrot tips for use in pet foods. The performance of the factory is less than expected, Meeuwis hinted. "The realization of the assumptions we had beforehand are disappointing in practice. Then you have to write off."
Impact of the corona crisis
The turnover of Cosun Beet Company, the former Suiker Unie, rose to €811 million last year and recorded a slightly higher net result. Cosun traditionally does not report the profit figures of their specific business units. Aviko saw its turnover rise to €907 million, with the result recovering after the impact of the corona crisis in 2020. The result is not yet at the level of before the corona crisis. Sensus, the producer of inulin from chicory, saw a strong improvement in the result and Duynie and SVZ also recorded more turnover and higher profits.
Cosun realizes that the beet price - and therefore also the financial yield of beet cultivation - should be much less sensitive for member growers to the volatility of the markets in which Cosun is active. de beet price for the 2021 campaign (of €40 per net ton of beet with a sugar content of 17% sugar) is not enough, said Dirk de Lugt, chairman of the Supervisory Board of Cosun. "The balance is not sufficient to set up the cultivation profitable and with a risk premium," says De Lugt. He also points to the higher costs for fertilizer and crop protection. "That's not enough, it has to get better."
Maximum valorisation
Cosun has therefore set the target in the new strategy that from 2025 the beet price must be above €45 as standard. To this end, the company will work towards maximum valorisation of the sugar beet. In addition, create and expand more added value in French fries in the European Union and China and vigorously innovate and grow in food ingredients such as dietary fibre, vegetable protein and biobased ingredients. Cosun also wants to increase the value of residual storms for animal feed and bio-fermentation, for example. This should lay a solid foundation in the profitability and results of the company and thereby lift the beet price to a higher level. Fluctuations in the price must also be reduced, so that growers can count on a higher and more stable financial result from beet cultivation.
Neither Meeuwis nor De Lugt dare to give any expectations about the level of the beet price for 2022. Although the strong upward movement in prices on the global sugar market has largely been incorporated in the sales contracts to sugar buyers, the effect of inflation and the increased raw material costs are difficult to calculate for the time being. Whether there is therefore a clearly higher beet price for 2022, which was more or less announced last year, remains to be seen for a while.
Eric the Thrush
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