Beet processor British Sugar, part of Associated British Foods (ABF), expects a significant increase in profit next year. The high sugar prices, the low beet prices and the weak position of the pound against the euro point to this in particular.
The beet harvest in England is a lot lower than in the previous year. British Sugar expects to harvest just under 900.000 tons this year. However, the company uses contracted prices for one year. This, in combination with the lower beet prices, will ensure that British Sugar will still book a higher turnover.
The abolition of the European sugar quota also contributes to the expected increase in profits. British Sugar expects to be able to increase its harvest area by 30 percent to more than 100.000 hectares of land.
British Sugar's parent company, Associated British Foods, is also doing well outside the UK. ABF expects that almost 385.000 tons of sugar will be produced at Azucarera in Spain.
The Guadalete refinery in Spain is expected to produce 295.000 tons of sugar. Both cases involve sugar produced from beets. According to ABF, the profit here will mainly come from the high sugar prices.
The company sold five of its cane sugar factories in China to Nanning Sugar in December. This has brought Associated British Foods £297 million. In addition, ABF expects the two sugar beet factories in Zhangbei and Qianqi to produce record sugar production. External influences, such as bad weather conditions, could not match the high sugar prices, according to the British company. The company does not expect this to affect profits.
African sugar producer Illovo has made a good recovery after last year's bad weather conditions. As a result, the harvest last season was very disappointing. It is expected that Illovo will continue to recover this year and that 1,7 million tons of sugar will be produced.
The organization does expect that there will still be significant shortages of sugar in the coming year. The stricter rules from the European Union regarding the supply of sugar will ensure that prices remain high.
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