French sugar group Tereos has posted its first full-year net profit in three years, mainly helped by a rebound in sugar prices in Europe, and said it was confident for the current season despite the COVID-19 crisis.
The second largest sugar maker in the world said it had a net profit of €24 million ($27 million) in the year to 31 March, up sharply from a loss of €260 million in 2018/2019, also helped by a rise in volumes and cost cuttings.
Tereos, whose operations are mainly based in Europe and Brazil, was confident that the COVID-19 crisis would have a limited impact on its business as it had already contracted most of its export volumes in Brazil and sales in Europe.
European sugar prices in April stood at an average €375 a tonne, compared to €370 at the end of March, supported by a supply deficit in the bloc, it said.
Despite improved results, Tereos' net debt remained high at €2.56 billion, against €2.63 billion last year.
The group, which also has a large starch and sweeteners business, still has plans to open up to other investors within two to three years, Tereos CEO Alexis Duval said.
Closure Of Bars And Restaurants
The impact of the closure of bars and restaurants in Europe to stem the spread of the new coronavirus had cut demand for drinks by 25% and for ice cream by 24%, which was not fully compensated by extra consumer purchases at retailers, he said.
A rise in sugar sales in France caused its market share to jump just as its main competitors, Germany's Südzucker and French cooperative group Cristal Union, closed factories.
Duval was confident that a collapse in ethanol demand due to less driving and air travel, which lead to an average fall in demand of 50% for Tereos over March and April, was only temporary.