(Adds CEO comments, paragraphs 10-16)
By Michael Hogan
BRAUNSCHWEIG, GERMANY, May 23 (Reuters) - Germany’s second largest sugar refiner Nordzucker on Thursday became the latest major European producer to post a loss as the industry battles against a slump in prices.
Global sugar prices ended 2018 at their lowest in 10 years amid heavy oversupply.
Nordzucker posted a 36 million euro ($40.09 million) loss for the financial year to the end of February versus an after-tax profit of 118 million the previous year. Operating losses reached 58.1 million euros.
The unlisted company said it expects operating losses in the current financial year as well.
“For the financial year 2019/20 Nordzucker expects negative results because of continued low prices,” the company said. “But a steadily growing world market promises better prices in the medium term.”
Germany’s Suedzucker, Europe’s largest sugar refiner, also posted heavy sugar sector losses in May. .
The European Union liberalised its sugar market in September 2017, ending a system of guaranteed minimum prices and protected production quotas. This gave producers more freedom to expand and export, but a worst-case scenario emerged, with European producers exposed to collapsing world prices.
Nordzucker said turnover fell 18 percent to 1.35 billion euros, while sugar production fell to 2.4 million tonnes from 2.7 million tonnes in the previous year.
The market picture in the first full year after the end of the quota regime was “marked by considerable over-production inside the EU and on the world market,” CEO Lars Gorissen said at a news conference.
Sugar prices are expected to remain “at a very low level”, Gorissen said.
No European factory closures are currently planned but they can not be ruled out if the poor market continues, he said.
Gorissen has previously said he sees the difficulties facing the industry as an opportunity for expansion.
In February Nordzucker announced a deal to take over Australia’s Mackay Sugar which produces about 700,000 tonnes annually.
This was part of a strategy to expand into cane sugar production versus Nordzucker’s traditional sugar beet output in Europe.
Asked if more takeovers were possible, Gorissen said: “First we are working on the Mackay takeover which we want to complete this year. We can naturally envision further development steps by takeovers. Whether this will take place in the coming year we do not know.”
Asked if further takeovers in the cane sugar sector were possible, Gorissen said. “We want to develop our cane sugar business and Australia should be the first step in this.”
$1 = 0.8979 euros Reporting by Michael Hogan; editing by Jason Neely and Kirsten Donovan