Germany's second-largest sugar refiner, Nordzucker, has initiated a comprehensive internal transformation process, aimed at stabilising the company during low-price phases and securing long-term profitability.
Transformation Plan
The transformation process will include ‘strategic focus’ on sugar production in Europe and across the world.
The company will also adopt new processes, and consider cost-cutting in administration.
The move is an outcome of the volatile and highly competitive market environment for sugar in Europe.
Concern Areas
The sugar market reform has resulted in the drastic reduction of sugar prices in Europe, the company noted.
Additionally, subsidies in other major sugar-producing countries across the world, including the EU, has created unequal competitive conditions.
Business Expansion
In order to consolidate its position as a stable and successful company in the future, Nordzucker will focus on beet and cane sugar.
Nordzucker CEO Dr Lars Gorissen said, "In our core business of beet sugar in Europe, we will adapt our processes, organisation and cost structure to the changed market conditions.”
It plans to enter cane sugar production outside of Europe and is in talks to buy Mackay Sugar, in Australia. It is also looking for opportunities to expand its business into other regions.
Cost-Cutting Measures
The sugar refiner will also reduce costs by €20 million each, in personnel and non-personnel operations, due to its negative earnings outlook.
Gorissen called the upcoming transformation a challenge and added, "We are convinced that we are on the right track and will develop into a competitive, profitable, and globally active company in the new market environment."
In November of this year, the chief executive of Nordzucker had said that it expected to post losses into 2020 because of the tough market conditions.
© 2018 European Supermarket Magazine – your source for the latest retail news. Article by Dayeeta Das. Click subscribe to sign up to ESM: European Supermarket Magazine.
