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Germany’s Nordzucker Expects Losses Due To Low Sugar Price

Published on Oct 15 2018 3:15 PM in A-Brands tagged: Sugar / Commodities / Prices / outlook / Nordzucker

Germany’s Nordzucker Expects Losses Due To Low Sugar Price

Germany's second largest sugar refiner Nordzucker has said that it expects to plunge into the red because of continued low sugar prices following EU market deregulation.

Unlisted Nordzucker said its net profit tumbled 86% in the six months to Aug. 31, from a year earlier, to €11.6 million.

Sales fell 18% to €689.6 million.

"A loss is now inevitable for the Nordzucker Group in the current financial year due to the low sugar prices," Nordzucker said in a statement. "Given the anticipated prices, an even more substantial loss is to be expected in the (next) 2019/2020 financial year."

The EU liberalised its sugar market in September 2017, ending its system of guaranteed minimum prices and protected production quotas and giving producers freedom to expand and export more and linking EU prices to world markets.

But a worst-case scenario has emerged with European producers exposed to global prices, which hit 10-year lows in September in an oversupplied world market.

Earnings Decline

Germany's largest sugar producer Suedzucker has also warned its earnings will fall because of low sugar prices.

"The main reason for the decline in business was a significant drop in selling prices for sugar," Nordzucker said. "We expected prices to fall."

"The extent of this decline was driven by overproduction and subsidies - particularly in India."

Meanwhile, dry hot weather in Germany and elsewhere in Europe this autumn has hindered the start of this year's sugar beet harvest.

"This year's harvest and beet processing, which started in mid-September, will be affected by the unusually dry weather conditions," Nordzucker added. "Because of these conditions, the campaign got off to a late start in several regions compared to the previous year, and is expected to end in January."

"Great regional yield disparities are anticipated. Nordzucker is expecting below-average sugar yields overall.”

News by Reuters, edited by ESM. Click subscribe to sign up to ESM: European Supermarket Magazine.

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