Europe's largest sugar producer Südzucker posted a sharp surge in first-quarter operating profit and confirmed increased earnings forecasts for its new fiscal year, despite the impact of the Ukraine war.
Südzucker said in a statement operating profits in the first quarter of its new 2022/23 year that started on 1 March rose to €163 million ($166.23 million) from €49 million a year earlier.
The result was driven by good results from the sugar, starch, and fruit sectors and Südzucker unit CropEnergies, which produces the green fuel bioethanol, and has benefited from higher energy prices, it said.
The company confirmed it expected full-year 2022/23 operating profits of €400 million to €500 million from €332 million in the previous year.
Decline In Sugar Beet Cultivation
In Europe, higher prices for alternative crops are expected to lead to a further decline in sugar beet cultivation with a smaller harvest, it said.
'The EU is therefore expected to remain a net importer in the 2022/23 sugar marketing year, creating a positive market environment for Südzucker that should allow the drastic increase in raw material and energy costs to be passed onto the market through significant sugar price increases starting in October 2022,' it said.
It expects to transfer heavy recent cost increases, particularly in raw materials and energy, to new customer contracts.
'The underlying assumptions are still that the Ukraine war will be temporary and remain regionally contained, that despite the current developments physical supplies of energy and raw materials will be guaranteed and that the target and procurement markets will at least partly return to more normal conditions over the course of fiscal 2022/23,' Südzucker noted.
The sugar sector made a quarterly €1 million operating profit, from a €25 million loss in the same year ago period.
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