In the first nine months of the 2021/22 financial year (March 1, 2021 to November 30, 2021), Südzucker AG increased the turnover of its group from 550 million euros to 5,639 million euros (year previous: 5,089) million. While the turnover of the specialty products segment was slightly higher than last year, that of the fruit segment increased moderately and that of the sugar, CropEnergies and starch segments increased significantly.
The Group’s EBITDA was significantly higher than last year at 519 million euros (previous year: 456) million.
Thanks to a further significant jump in the third quarter, the group’s consolidated operating income now stands at 261 million euros (previous year: 195) million for the entire reference period. The increase in profit in the third quarter is mainly due to the significant improvement in the results of the sugar and CropEnergies segments. The significantly higher results of the sugar segment and CropEnergies are also at the origin of the increase in the group’s consolidated operating profit for the entire period considered. On the other hand, the operating result of the special products segment fell sharply and that of the fruit segment fell slightly. In the starch segment, after a good third quarter, the overall operating result for the period under review is now slightly higher than in the previous year.
The Sugar segment once again posts positive results in the third quarter
Revenues in the sugar segment increased significantly to reach 1,969 EUR (previous year: 1,731) million. This revenue growth is mainly attributable to the increase in revenue from sugar sales since the start of the expired 2020/21 sugar campaign as well as since the start of the 2021/22 sugar campaign. In addition, the increase in volumes since the second quarter of 2021/22 has also had a positive effect.
While the operating loss for the first quarter of fiscal year 2021/22 was still significantly higher than the previous year, the sugar segment was able to return to positive results since the second quarter and achieve a significant improvement compared to the previous year. As a result, the cumulative operating result also improved significantly to EUR -10 (previous year: -86) million. The higher sugar revenues were initially offset by higher production costs from the 2020 campaign due to the price of raw materials. Since the third quarter, further cost increases, some drastic, for energy, packaging materials and raw materials have had an increasingly negative impact. The positive factors since the second quarter are the increase in sales volumes and better use of production capacities.
Beet cultivation and the 2021 transformation campaign
Growing conditions in the spring and summer of 2021 – especially a sufficient water supply throughout the growing period – are reflected in yield expectations. Beet yields significantly above average are expected for Germany, France, the Czech Republic and Moldova. In Poland, Austria, Slovakia and Romania, beet yield forecasts are average to slightly above average. Below average beet yields are only expected in Belgium and Hungary. At 121 days (previous year: 108), the average duration of the treatment campaign should be significantly longer than the previous year. Given the large regional variations in beet yields, the campaign has already ended in December 2021 in some places, while in other producing regions it will not be completed until February 2022. Overall, the group Südzucker expects to produce 4.2 (previous year: 3.5) million tonnes of sugar out of 27.7 (previous year: 24.1) million tonnes of sugar beet.
Special products segment recorded revenues comparable to the previous year, but significantly lower results
Despite the volatile and difficult environment during a pandemic period, the revenues of the special products segment were slightly above the level of the previous year at 1,314 million euros (previous year: 1,298) million. Volumes for the third quarter are therefore higher than a year earlier. Last year the start of the financial year was marked by increased demand, for example for frozen pizzas, which was strong in some cases. In addition, the turnover increased in the third quarter of the current financial year, so that the shortfall from one year to the next is now made up after nine months.
However, operating profit was impacted by higher costs of raw materials, energy and logistics compared to the previous year and fell significantly to 94 million euros (previous year: 118) million. Although the additional charges were offset to some extent by price increases, the cost impact is still reflected in the lower operating margin.
CropEnergies segment achieves record third quarter results
The CropEnergies segment was able to significantly increase its revenues to 731 million euros (previous year: 582) million. The increase in sales volumes and revenue contributed to this revenue increase. The turnover for the period considered was significantly higher than for the same period of the previous year and, in particular in the third quarter, continued to grow significantly compared to the first half of the year.
In line with the evolution of volumes and turnover, operating profit increased significantly to reach 94 million euros (previous year: 79) million during the period considered, despite costs of significantly higher raw materials and energy. Following the strong increase in ethanol revenues in recent months, a record result was achieved in the third quarter.
Substantial increase in turnover and moderate growth in results in the starch segment
Starch segment revenues increased significantly to reach 686 million euros (previous year: 586) million. The encouraging volume development and an overall increase in turnover had a positive effect.
In line with the evolution of volumes and turnover, the operating result increased moderately to reach 44 million euros (previous year: 42) million during the period considered, despite raw material costs and energy significantly higher. The positive evolution of ethanol prices in recent months had a positive impact on results, especially in the third quarter.
Fruit segment with moderate growth in revenues but moderate decline in results
The fruit segment turnover of 939 million euros (previous year: 892) million was slightly higher than the previous year. The turnover of fruit preparations increased mainly due to higher selling prices. Due to higher prices in the third quarter compared to the previous year quarter, overall fruit juice concentrate revenues were comparable to the same period last year.
The operating result fell slightly to 39 million euros (previous year: 42) million. The increase in sales of fruit preparations could not fully offset the increase in costs. The growth in results was also impacted by higher costs and a slight decrease in sales volumes, despite slightly higher revenues from fruit juice concentrates.
The forecast for fiscal year 2021/22, updated in the MAR announcement of December 15, 2021, continues to be confirmed. Due to the unforeseen and renewed intensification of the effects of the coronavirus pandemic – fourth wave with the emergence of the new omicron variant – and the associated potential burdens, risks from the pandemic will persist in the fourth quarter of fiscal year 2021 / 22 and possibly beyond, the economic and financial impact and duration of which remain difficult to assess. In addition, we still anticipate very high volatility in target markets and price increases in supply markets in many divisions.
Consolidated group turnover of 7.3 to 7.5 EUR (previous forecast: 7.1 to 7.3; previous year: 6.7) billion is still expected for the 2021/22 financial year. A significant increase in revenues is expected in the sugar and starch segments. The CropEnergies segment is expected to be between 1,000 and 1,040 million euros. A moderate increase in revenues is expected in the specialty products and fruit segments.
The consolidated operating result of the group is still expected to be between 320 and 380 EUR (previous forecast: 300 and 400; previous year: 236) million. Südzucker expects the operating result of the sugar segment to be between 0 and 30 million euros (previous year: -128) million. The operating result of the special products segment is expected to be significantly lower than the high level of the previous year. The operating result of the CropEnergies segment is expected to be between 110 and 140 million euros (previous year: 107) million. In the newly created starch segment, results are expected to be significantly higher and the operating result of the fruit segment is expected to remain at the level of the previous year.
Südzucker expects capital employed to remain at last year’s level. Based on the improvement in operating results mentioned above, ROCE is expected to increase significantly (previous year: 3.8%).