Germany's Suedzucker, Europe's largest sugar refiner, said on Thursday it was optimistic its core sugar sector would achieve higher earnings as the EU enters a new era with a liberalised sugar market. Suedzucker CEO Wolfgang Heer told a news conference he expects a significant increase in EU sugar production following the end of production quotas and export limits later this year.
EU farmers are expanding production of sugar beet this year when they will be freed to grow as much sugar as they want and sell it globally, as the EU liberalises its sugar market after a decade of strict output quotas and export limits. Reforms start to come into force from September 30. "We see ourselves as well prepared," said Heer. Suedzucker would make use of its new freedom in the liberalised EU market to increase sugar exports, he said. Currently only about five percent or 235,000 tonnes of the annual production of 4.7 million tonnes sugar is exported outside the EU. It is hoped to sharply increase this to up to 800,000 tonnes, he said. Suedzucker has invested about 24 million euros ($26.6 million) in building 240 specialist railway cargo wagons to transport its sugar to seaports for export to new markets such as the Middle East and Asia, he said.
Suedzucker said in a statement on Thursday it expected its operating profit in its new financial year between March 2017 and February 2018 as market liberalisation starts to reach between 425 million and 500 million euros ($473-$557 million) compared with 426 million euros in its previous financial year. Suedzucker said its earnings in the new year should be "driven mainly by better sugar segment results".
It expects a "significant retreat" in earnings from its bioethanol sector under its green fuel unit CropEnergies and its special products sector which includes pizzas, animal feeds and food ingredients. Suedzucker also forecast consolidated group sales revenues of 6.7 to 7.0 billion euros for the new 2017/18 fiscal year, up from 6.5 billion euros in 2016/17, with increases expected in the sugar and special products sectors. Initial signs of likely increased sugar output in Suedzucker's key German market came on Wednesday, as farmers have expanded sugar beet plantings in 2017 by 21 percent on the year to 403,800 hectares.