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UPDATE 1-Suedzucker upbeat as strong sugar earnings raise profits
July 13, 2017 / 7:03 AM / 5 months ago

UPDATE 1-Suedzucker upbeat as strong sugar earnings raise profits

(Adds detail, additional comment from company spokesman)

HAMBURG, July 13 (Reuters) - Europe’s largest sugar refiner, Suedzucker, reported a surge in quarterly profits on Thursday and said imminent deregulation in the EU would enable it to tap new markets.

Suedzucker’s operating profit for the three months through May rose 39.4 percent to 153 million euros ($175 million), beating analysts forecasts for 143 million euros and helped by strong revenues from sugar and biofuels.

As a major player in the market, it is well placed to benefit from a radical deregulation of the EU sugar market from Sept. 30, when farmers will be free to grow as much as they want and refiners be able to sell sugar globally after decades of strict output quotas and export limits. Guaranteed minimum prices will also end.

“We are looking optimistically into the new era of the liberalized EU sugar market and we are forecasting higher revenues for our sugar sector in the free EU sugar market,” a Suedzucker spokesman said.

Suedzucker said on Thursday it expects operating profits from sugar in the current financial year “to rise considerably” from the 72 million euros achieved in its previous financial year as a result of the free EU market.

It confirmed its previous forecast that group operating profit in its current 2017/18 financial year could reach 425 to 500 million euros, compared to 426 million euros last year.

“The foundations have been created for a good sugar harvest this year with increased beet area sown in good conditions. A larger crop would keep our factories occupied and reduce unit costs,” the spokesman said.

“From the end of September the EU’s limits on sugar exports will be removed and we hope to export more onto world markets. The liberalization may also mean a greater fluctuation in EU sugar prices.”

Suedzucker’s total sales rose 10.9 percent in its first quarter to 1.78 billion euros, and net profit increased 56.3 percent to 120 million euros.

Analysts surveyed by Reuters had forecast quarterly net profit of 74.5 million euros, and sales of 1.77 billion euros.

The Suedzucker Group expanded its beet cultivation area this year by about 15 percent on last year to 443,644 hectares, amid “average to excellent planting conditions,” it said.

In its pizza-to-starches special products sector it forecast a “significant decline” in operating profit in the current year on higher raw materials costs.

Biofuel unit CropEnergies on Wednesday reported higher earnings and forecast increased earnings in its current financial year. ($1 = 0.8745 euros) (Reporting by Michael Hogan; Editing by Victoria Bryan and Susan Fenton)

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