Tereos warns of more trouble ahead after low sugar prices cut H1 results
By Sybille de La Hamaide
PARIS, Nov 20 (Reuters) -French group Tereos, one of the world's largest sugar makers, on Wednesday reported an 18% drop in its first-half net profit, pressured by a fall in sugar and sweeteners prices, and warned of a further decline in the second part of its fiscal year.
The group's net profit fell to 196 million euros in the six months to Sept. 30, while sales dropped 11% to 3.2 billion euros ($3.4 billion), Tereos said in a statement.
Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) shed 15% to 506 million euros.
"The results were impacted by the drop in sales prices on the European markets, particularly in the starch and sweeteners segments, compared to the same period in 23/24," it said.
The significant drop in recently contracted sales prices for sugar in Europe and liquid sweeteners compared to the previous year would have a negative impact on the group’s second-half results, Tereos said.
Tereos' results were in line with Europe's largest sugar producer Suedzucker SZUG.DE, which also reported a slump in H1 results and flagged lower third-quarter earnings.
Sugar prices in Europe slid to around 450 euros per ton from around 700 euros during the contracting period (July–October) and 860 euros in the previous campaign, pressured by large imports, mainly from Ukraine, and a sharp increase in sugar beet areas in Europe this season, Tereos said.
The situation could change next year, with several European producers pointing to a potential decrease in the sugar beet area, it said.
The impact of large fires in Brazil that hit 6% of Tereos' sugar cane area in August had a limited impact as some of the burnt cane has been harvested, Tereos, which had large activities in the region, also said.
The group's net debt, which has been under scrutiny in the bond market, stood at 2.0 billion euros, down from 2.4 billion euros on March 31, it said.
($1 = 0.9446 euros)
Reporting by Sybille de La Hamaide; Editing by Jan Harvey
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