HAMBURG (Reuters) - Europe's largest sugar refiner Suedzucker AG (DE:SZUG) on Thursday posted a 40% slump in first-quarter earnings, due to a sharp fall in global sugar prices.
Operating profit fell to 47 million euros (£42 million) in the first quarter ended May of its 2019/20 fiscal year, against an operating profit of 78 million euros in the year-ago period, the Germany-based company reported.
Net profit fell 73% to 11 million euros.
The sugar division made an operating loss of 36 million euros, compared to an operating profit of 8 million euros last year. The sugar segment's quarterly sales fell 16.4% to 581 million euros.
"The main reason for this is the historically low sales revenue level in the European Union," it said.
Suedzucker reiterated its 2019/20 consolidated group operating profit forecast of between zero euros and 100 million euros.
Global sugar prices hit their lowest in 10 years in late 2018 amid heavy world oversupply and but have stabilised at depressed levels in 2019.
Suedzucker said in January it will close sugar factories in Germany, France and Poland and cut production capacity by around 700,000 tonnes per year in a plan to save about 100 million euros annually.
The company had in May posted a slump in full year 2018/19 results as its sugar sector suffered losses.
"The sugar market has stabilised but at a very low level at which no sugar producer can currently operate profitably," a Suedzucker spokesman told Reuters.
"We have seen some individual signs of improvement in sugar spot market prices but it is still not possible to say when a sustained improvement in the sugar price is to be expected."
Suedzucker repeated on Thursday that it expects a full-year 2019/20 operating loss in its sugar sector of between 200 million euros and 300 million euros.
"This forecast for the sugar segment continues to be marked by a high degree of uncertainty in a profoundly changing market environment," it said.
First quarter sales fell 3.5% to 1.68 billion euros, with the drop in sugar segment cushioned by a robust performance from the fruit, special products and bioenergy divisions.
For 2019 sugar crop, the group's beet cultivation area was reduced by about 10% to 391,000 hectares.