Tereos Sees Improved Results Last On Better Sugar, Ethanol Outlook
French sugar group Tereos said a rebound in sugar prices and strong ethanol demand should help it boost its performance until the year-end after posting improved third-quarter results, although its debt level continued to rise.
The world's third-largest sugar maker, had suffered from a fall in world sugar prices amid a surge in supplies, partly driven by more output from the European Union after it scrapped export and output limits in 2017.
But sugar prices have since recovered partly, raising hopes of improved results at European producers at a time when demand of ethanol is also rising in the bloc.
Tereos said adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) climbed to €122 million in the third quarter of 2109/2020, versus €52 million in the same period the previous year.
Tereos CEO Alexis Duval had told Reuters in November that he expected to report improved results in the second half of 2019/20, driven by higher prices for both sugar and ethanol.
In the first half of the 2019/20 fiscal year the company recorded a net loss of 21 million euros.
Tereos' sugar sales in Brazil should continue to be driven by higher world sugar prices expected above $14 cts/lb over the next quarter, by ethanol market growth driven by high consumption and an increase crushed cane volumes, it said.
Its starch and sweeteners business, which benefited from a drop in wheat prices in the third quarter, will continue to benefit from a new industrial organisation, it said.
European wheat prices, however, have strongly rebounded since early September.
The group's net debt continued to rise, despite positive income of €215 million from its asset swap with Italian group ETEA last year.
It reached €2.91 billion on Dec. 31 last year versus €2.69 billion on Dec. 31, 2018, putting the debt to EBITDA ratio at 7.1x from 8.9x at the end of September.
However, Tereos said the net debt on Dec. 31 was only slightly higher on the year after taking account of a 125 million euro impact of new accounting standard IFRS 16 and that readily marketable inventories had risen 80 million euros on year.