Third quarter: good earnings – difficult market

15 January 2018

Third quarter: good earnings - difficult market

Fall in prices will put pressure on fourth quarter and new financial year

The Nordzucker Group further improved its earnings in the first nine months of the 2017/2018 financial year. However, the outlook for the remaining three months and the next financial year is less promising.

Up to the end of the first nine months of the current financial year, Nordzucker generated revenues of EUR 1,284 million, just below the previous year's figure of EUR 1,307 million. However, the net income for the period increased significantly overall, from EUR 81.7 million in the previous year to EUR 143.5 million.

On the revenue side, this development is primarily due to the lower sales volumes of bioethanol and by-products. The clear increase in net income in the first nine months of this financial year is largely the result of the successful implementation of the cost-saving programme and a long-term contract portfolio with customers and suppliers.

The end of the previous sugar market regime on 1 October 2017 means that quotas no longer apply to sugar. Since then, there have been no volume limits in the EU sugar market and unrestricted exports are also possible again. This new framework and an expected production surplus within the EU, including the resulting increase in competition, has already significantly worsened the market situation and can be seen in the considerably lower sugar prices.

CEO of Nordzucker AG, Hartwig Fuchs, emphasizes: 'We have always been critical of the expansion of acreage and the resulting overproduction of sugar in the EU. It is currently placing the entire industry under enormous pressure.' Fuchs stressed, however: 'We are a financially strong company and we can and will take advantage of opportunities in a consolidating market.'

Outlook

2017/2018 will be a year of transition. Nordzucker expects to achieve significantly higher earnings in the current financial year than in the previous year. With the cessation of the sugar market regime, the impact of world market prices on EU sugar prices will increase further, however. The tough competition and the drop in prices will also continue into the last quarter. Earnings in the fourth quarter will be significantly lower compared to those in the previous quarters.

Nordzucker's financial year begins on 1 March and closes at the end of February. The interim report for the first nine months covers all commercial activities from 1 March 2017 to 30 November 2017. The full interim report for the first nine months can be found in the download centre at www.nordzucker.de.

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Third quarter: good earnings - difficult market

Background

The Nordzucker Group, based in Braunschweig, Germany, is one of the leading sugar manufacturers in Europe. The Group also processes sugar beet into bioethanol and feed. Sustainability along the entire value chain is a top priority for the company. A total of 3,200 employees and 18 production and refinery facilities across the Group ensure excellent products and services, thus providing a strong foundation for further growth.

For queries please do not hesitate to contact Tanja Schneider-Diehl via phone or mail.
Fon: [phone]
Mail: Tanja.schneider-Diehl{@}nordzucker[.]com

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