Lower sugar price hurts Südzucker's results

For Südzucker, the results from sugar taste a bit sour. The German food group, which is also active in other branches such as starch, fruit and biofuels, saw its sugar operating profit decline sharply in the first three months of the 2024/25 fiscal year. Südzucker has issued a profit warning for the current second quarter.

Südzucker uses a broken financial year, starting on March 1. In the first three months, up to and including May, the group was able to significantly increase its sugar turnover: by 16% to just under €1,08 billion. Südzucker, one of the largest sugar producers in the world, was able to sell considerably more sugar in these months, partly because the European Union was very competitive on the world market. The higher sales were driven by lower sugar prices, which limited the positive boost to profits. The higher production costs in the 2023 beet campaign weigh heavily on the operating result, Südzucker reports in a statement. Operating profit fell by 65% ​​to €59 million in the first three months of the fiscal year.

Higher sugar beet acreage
Südzucker has allocated a higher sugar beet area to growers for this year's campaign, without mentioning a specific figure. In most growing areas, sugar beets were sown between the end of March and mid-April, on average two weeks earlier than last year. In Belgium in particular, there were more problems due to the persistent rainfall. The sowing had not yet been completed there in June of this year. Südzucker assumes an overall average sugar beet harvest for this campaign year.

Südzucker is also active in wheat starch products, biofuels (ethanol) and animal feed products, among others. The company is also faced with lower prices in these activities and therefore operating results under pressure. In the Fruit division, where the company sells fruit preparations and fruit juice concentrates, among other things, Südzucker was able to present increasing turnover and a better operating result.

Profit warning due to wars
The food group had to issue a profit warning for the second quarter of the fiscal year, from June to August. Südzucker expects a sharp decline in results due to the future impact of the EU's expanded duty-free access for agricultural imports from Ukraine. This is in addition to the higher volatility on the purchasing and selling markets caused by the ongoing war in Ukraine. The implications of the war in the Middle East between Israel and Hamas are also difficult to assess during this period, Südzucker explains.

Eric the Thrush

Eric is a member of the editorial staff of Boerenbusiness. As a descendant of an arable family, farmer's blood flows through Eric's veins. He considers himself a generalist, but with a preference for economics, trends, markets and marketing.

e.delijster@boerenbusiness. Nl

© DCA Market Intelligence. This market information is subject to copyright. It is not permitted to reproduce, distribute, disseminate or make the content available to third parties for compensation, in any form, without the express written permission of DCA Market Intelligence.