Suedzucker posts Q2 profit slump, cuts FY outlook on weak sugar market
Adds details on market, harvest outlook
HAMBURG, Oct 10 (Reuters) -Europe's largest sugar producer Suedzucker SZUG.DE on Thursday reported a63% fall in quarterly operating profit and cut its full-year earnings forecasts on weaksugar markets.
Suedzucker reported operating profit of 114 million euros ($124.70 million) in the second quarter to Aug. 31 of its 2024/25 fiscal year, down from310 million euros in the same quarter last year.
The company warnedin September that its second-quarterearnings would decline followingunexpectedly sharp deteriorations in market expectations for its core sugar sector.
On Thursday it confirmed the September warning and said the group profit in the 2024/25 fiscal year will fall to between 175 and 275 million euros from the previous forecast of 500 to 600 million euros. Suedzucker reported a profit of 947 million last fiscal year.
Improved sugar beet harvest expectations around Europe in the current 2024 sugar crop processing campaign are increasing volumes of sugar offered for sale in the European market, it said.
EU sugar prices peaked at 856 euros a metric ton in December 2023, falling to 775 euros/ton in July 2024, it said.
The reported spot price level is now well below this average after expanded cultivation and good harvest expectations for the 2024 crop, the company said.
Suedzucker, which also has interests ranging from biofuels to processed foods, expects full-year operating losses in its sugar sector between 50 and 150 million euros.
“The downward trend in EU price levels has since accelerated substantially in recent weeks, leading to an unexpected deterioration in market conditions,” Suedzucker said.
“A higher EU harvest expectation from the current 2024 processing campaign with a correspondingly higher sugar volume of the European market and a significantly lower global sugar market price are the reasons for the downturn.”
The company also expects sugar production costs to rise, which can only be passed to customers with delays.
Reporting by Michael Hogan in Hamburg and Bartosz Dabrowski in Gdansk, Editing by Miranda Murray and Eileen Soreng
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