Germany's second largest sugar refiner Nordzucker reported a 79% surge in annual profits as it benefited from high sugar prices in the last year, but cautioned a falling market could pressure results in the new year.
Unlisted Nordzucker posted a €326 million euro ($353.5 million) net profit for its 2023/24 financial year to end-February, one of its best ever performances after €182 million profit the previous year.
Nordzucker's Australian subsidiary Mackay Sugar contributed €27 million to operating profits. Group sales rose 29.3% to €2.9 billion.
'The main reason for this is a higher price level for sugar compared to the previous year, which more than compensated for the significant cost increases for raw materials and energy supply, as well as in logistics,' the company said in a statement at a press conference to present its results.
'However, another record year is not to be expected in view of declining prices and volatile markets,' it said. 'We currently do not expect results at this level to be achievable in the coming years.'
Acquisitions
Five years after the takeover of Mackay Sugar, Nordzucker is again considering acquisitions in the cane sugar sector, CEO Lars Gorissen told Reuters after a press conference.
Mackay Sugar’s strong performance showed that “cane sugar is a good development field for Nordzucker,” Gorissen said.
He said a range of takeover possibilities in the cane sector were being considered, this time outside Australia.
“This involves a wide range in Africa, Asia and South America,” he said. Talks had been held last year without agreement and efforts continue, he said.
Sugar Prices
There are signs that sugar prices might fall, it said, citing increasing production capacity in the EU and imports from Ukraine among other factors. 'World market prices for sugar are expected to decline,' it added.
Sugar futures hit 18-month lows in May on expectations of high sugar harvests in Brazil.
Europe's and Germany's largest sugar producer Südzucker said on May 16 it expected lower annual earnings in its new year largely because of high production costs and weak sugar prices.
Nordzucker expects earnings before interest and taxes (EBIT) in its new 2024/25 financial year of more than €200 million, down from €421 million in 2023/24.
