German food group Südzucker has reported a 90% jump in third-quarter operating profit, largely driven by its sugar business.
In an advance earnings release, Südzucker said operating profit in the three months to 30 November rose 90% year on year, to €126 million ($141.90 million), while sales increased 17% to €2.04 billion.
'The significant improvement in the group’s operating result is mainly driven by the sugar segment,' the company said.
Südzucker, the operations of which range from processed foods such as pizza to food ingredients and bioethanol fuel, said its sugar business swung to about a €9 million operating profit from a €28 million loss in the same period last year.
'Higher Sugar Prices And Good Demand'
"The improvement in the sugar sector is largely due to higher sugar prices and good sugar demand,” a Südzucker spokesperson told Reuters.
“Sugar prices in the previous two years were somewhat disastrous, but the picture has improved with European supply and demand in better balance.”
Sugar futures hit 4-1/2 year highs in October.
Those factors also prompted Südzucker to raise its sales forecast.
"After nine months we have a better view on the current fiscal (position) to tighten the range of our earnings forecast,” the spokesperson said.
Südzucker expects full year sales of between €7.3 billion and €7.5 billion, up from its previous forecast of €7.1 billion to €7.3 billion. Group operating profit is expected at €320 million to €380 million, up from €300 million to €400 million forecast previously.
"Sugar demand is positive despite the impact of the pandemic," the spokesperson added and continued, "however, there are still sectors, such as hotels and restaurants, which are suffering.
"But overall sugar sales are stable and we are seeing the public acting more responsibly and not ... undertaking the panic buying which took place when there were previous fears about lockdowns. This is better for us than if the public make large purchases and then stop buying to use up their supplies."
In October, Südzucker reported group revenues of €3.6 billion for the first half of its financial year 2021/2022, up by around €250 million and ahead of the previous years' figure of €3.4 billion.