HAMBURG (Reuters) - Suedzucker (DE:SZUG) on Thursday confirmed a forecast made last month for a strong profit increase in its current financial year on hopes its core sugar business will improve despite the coronavirus crisis.
Europe's largest sugar refiner had forecast in April that operating profit in its 2020/2021 financial year starting in March would rise to between 300 to 400 million euros ($324.3 to $432.4 million), up from 116 million euros in the 2019/20 financial year to end-February 2020.
Suedzucker said the forecast "is subject to the economic and financial impact as well as the duration of the temporary exceptional situation in connection with the coronavirus pandemic, which is not yet foreseeable."
Suedzucker had made an advance release in April of its results for 2019/20, which ended just before the coronavirus crisis took hold in much of Europe.
CEO Niels Poerksen said on Thursday in a presentation on the results that the coronavirus crisis had so far had a mixed impact on the group.
Suedzucker's retail sales of sugar and frozen pizzas from its food division and sales of hand sanitizer from its Cropenergies (DE:CE2G) biofuels business increased. But sales of bioethanol for fuel and food demand fell after restaurants and catering shutdowns.
The company expects an improvement in the performance of its core sugar business in the second half of 2020/21, which will show the impact of higher revenues and cost savings, the presentation said.
Suedzucker and other European sugar producers have suffered in the past few years from the double blow of low sugar prices and EU market liberalisation, which exposed them to depressed world markets.
Suedzucker last year announced the closure of five sugar factories in Germany, France and Poland because of the slump in the sugar market.
The company said the restructuring was now finished with 700,000 tonnes of sugar production capacity closed.
Operating earnings from Suedzucker's sugar business in 2020/21 are now forecast at between a loss of 40 million euros to a profit of 60 million euros against an operating loss of 236 million euros in 2019/20.
EU sugar prices are rising and “the price increase is continuing,” the presentation said.
The EU’s 2020 sugar beet harvested area was expected to be smaller. The EU is expected to be a net sugar importer in the new sugar season, with local production not meeting needs, Suedzucker said.
EU sugar prices were reported at about 370 euros a tonne in February, up from just over 300 euros a tonne for much of 2019, the company presentation said.
