By Michael Hogan
BRAUNSCHWEIG, GERMANY, May 24 (Reuters) - Germany’s second largest sugar refiner Nordzucker is in discussions about international expansion projects in Europe, South America and Asia, its CEO said on Wednesday.
“We are considering everything: takeovers, shareholdings and joint ventures,” CEO Hartwig Fuchs told Reuters.
It is hoped but not certain that an announcement about the projects could be made in the next six months, Fuchs said before a news conference to present the unlisted company’s annual results.
Nordzucker is planning international expansion as it positions itself to deal with the challenges of EU sugar market liberalisation.
The EU is introducing a radical sugar market deregulation from Sept. 30, 2017, with farmers free to grow as much as they want and refiners able to sell sugar globally after decades of strict output quotas and export limits.
Nordzucker’s international expansion projects involve sugar production in some areas and other activities such as marketing, Fuchs said. No company names or countries are being given.
Non-listed Nordzucker, mainly owned by sugar farmers, will increase sugar exports when the EU removes export restrictions this year.
“We have already increased our exports in the past two years and will do so further after market liberalisation,” Fuchs said.
Downward pressure on sugar prices is expected in Europe after market liberalisation.
“I think we will see a consolidation in the European sugar industry,” Fuchs said. This could involve closures of smaller, non-profitable sugar producers.
Fuchs also told the news conference that Nordzucker has an “excellent position” and will continue growth in the newly liberalised sugar market.
The company also has sugar factories in Denmark, Sweden, Finland, Poland, Lithuania and Slovakia and is involved in activities in other European countries.
“Demand in the EU is stagnating,” Fuchs said. “We will actively participate in the consolidation of the European sugar market and seize chances in the world market, step for step and with a sense of proportion.”
Nordzucker on Wednesday posted net profits of 99 million euros ($110.7 million) in its 2016/17 financial year to end February 2017, sharply up from 15 million euros in the previous year as the company benefited from higher sugar prices. Sales in 2016/17 rose six percent to 1.7 billion euros.
In its new financial year Nordzucker expects earnings to “reach at least” the level of 2016/17. ($1 = 0.8941 euros) (Editing by Jason Neely and Ed Osmond)