Europe's largest sugar producer Südzucker said it expects a 'significant decline' in its June-to-August quarterly earnings, hurt by prolonged duty-free agricultural imports from Ukraine into the EU.
The European Union in April extended tariff-free trade for Ukrainian farm produce, but also introduced curbs on import volumes to assuage protesting farmers in the bloc.
Ukraine already reached the annual quota of sugar exports into the EU in May and said at the time it would halt supplies.
'The future impact of the negative influences stemming from the EU's extended duty-free access for agricultural imports from Ukraine, which is now limited in terms of volume, remains uncertain,' the group's statement said.
Südzucker sees no immediate effect from the EU import curbs as the market is still oversaturated with cheaper Ukrainian sugar, which allowed clients to get lower prices in contacts within the last two years, the company's spokesperson told Reuters.
Impact On Sugar Prices
Commodities markets such as sugar are typically slow to react to regulatory changes as participants tend to enter one or two-year contracts, so the Ukraine imports will continue to have an impact on sugar prices for a very long time, he added.
The fallout of wars in Ukraine and the Middle East continue to exacerbate already highly volatile sales and procurement markets, making consequences hard to assess, the firm's statement said.
Its shares fell 3% on the news, reaching their lowest in a month.
Südzucker did not specify the level of expected earnings before interest, taxes, deprecation, and amortisation (EBITDA) in its fiscal second quarter until August, but it confirmed its forecast for the 2024/2025 fiscal year made on 15 April.
Last year, the German firm's EBITDA stood at €383 million ($414.44 million) in the second quarter.
