European sugar refiner Südzucker has reduced its earnings forecast, citing an 'unexpected' deterioration in market expectations for the sugar segment.
Südzucker expects its sugar segment to incur an operating loss in the second half of the year (from 1 September 2024 to 28 February 2025) as well as in its full financial year 2024/25 (to 28 February 2025).
The European market has recently seen an increase in the supply of sugar due to improved harvests from the 2024 campaign.
Moreover, a decline in global sugar prices has impacted EU sugar prices negatively.
Südzucker has lowered its group revenue forecasts to a range of €9.5 billion to €9.9 billion, down from its previous forecast of €10.0 billion to €10.5 billion.
Group EBITDA is expected to range between €55 million and €650 million, down from €900 million to €1 billion, while group EBIT will range between €175 million and €275 million.
Second-Quarter Highlights
Group revenue in the second quarter was on par with the prior-year level, at around €2.54 billion, Südzucker added.
Group EBITDA fell by 50% during the quarter to around €190 million.
Impact From Ukraine
Südzucker added that the ongoing war in Ukraine continues to exacerbate the already high volatility on the sales and procurement markets.
The company also highlighted that the impact of negative influences stemming from the EU’s extended duty-free access for agricultural imports from Ukraine remains uncertain.
The implications of the war that broke out in the Middle East last October are likewise difficult to assess, Südzucker noted.
In the first quarter, Südzucker posted a 45% fall in first-quarter earnings, hit by higher costs and lower sugar prices.
The German company reported operating profit of €155 million for the quarter ended 31 May, compared to €282 million in the year-ago quarter.
