PARIS, Feb 27 (Reuters) - Higher sugar prices, improving prospects for ethanol demand and a deep restructuring have boosted French co-operative group Cristal Union’s results in recent months and brightened the outlook for the coming year, its chief executive said.
Cristal Union, the European Union’s fourth-largest sugar producer and third-largest ethanol maker, was hit like many of its peers by the end of EU production and export quotas in 2017, which prompted many producers to boost output just as prices collapsed amid high world stocks.
The company halted output at two sugar factories and closed a packaging unit and a dehydration plant after posting a loss of 99 million euros ($108 million) for the year to the end of January 2019.
For fiscal year 2019/2020, CEO Alain Commissaire expects a similar loss, mostly due to restructuring costs. But the revamp helped earnings before interest, tax, depreciation and amortisation (EBITDA) reach 40 million euros in the final quarter of 2019/2020, compared with 10 million euros for the whole of 2018/19, he said.
“We are rising, for us the crisis is behind us,” Commissaire told Reuters in an interview.
The group intends to boost production at its factories in Arcis-sur-Aube, east of Paris, and Bazancourt in northeastern France, to 30,000 tonnes from 25,000 tonnes per year within five years, with two thirds to be turned into ethanol as demand for the crop-based fuel increases, he said.
Ethanol sales have risen sharply in France, boosted by tax breaks, a decline in diesel demand and the growing use of so-called “flex-fuel” kits that allow cars to run on high-ethanol fuel.
Demand should also be helped by the EU’s “Green Deal” aimed at achieving carbon neutrality by 2050, notably by turning away from fossil fuels, Commissaire said.
Depending on the final shape of the plan, Cristal Union could even consider opening a new unit, he said.
“The implementation of the Green Deal will inevitably lead to more ethanol,” he said. “Not everyone can move to electric cars, so there must still be liquid fuels, and these liquid fuels need ethanol.”
Ethanol is made from sugar beet, sugar cane or grains and is blended with gasoline.
Cristal Union also intends to focus on methanisation - a process for extracting material from organic matter for reuse. It aims to transform up to 50% of the pulps - a byproduct of the sugar beet that can be also used in animal feed - of its Arcis-sur-Aube, Commissaire said.
“The world has totally changed for us over the past two years so we needed to redefine our business model,” Commissaire said.
$1 = 0.9201 euros Reporting by Sybille de La Hamaide; Editing by Mark Potter