Europe's largest sugar producer Südzucker has reported a 63% fall in quarterly operating profit and cut its full-year earnings forecasts on weak sugar markets.
Südzucker reported operating profit of €114 million ($124.70 million) in the second quarter to 31 August of its 2024/25 fiscal year, down from €310 million in the same quarter last year.
The company warned in September that its second-quarter earnings would decline following unexpectedly sharp deteriorations in market expectations for its core sugar sector.
It also confirmed the September warning and said the group profit in the 2024/25 fiscal year will fall to between €175 and €275 million from the previous forecast of €500 to €600 million. Südzucker reported a profit of €947 million last fiscal year.
Improved sugar beet harvest expectations around Europe in the current 2024 sugar crop processing campaign are increasing volumes of sugar offered for sale in the European market, it said.
Sugar Prices
EU sugar prices peaked at €856 a metric tonne in December 2023, falling to €775/tonne in July 2024, it said.
The reported spot price level is now well below this average after expanded cultivation and good harvest expectations for the 2024 crop, the company said.
Südzucker, which also has interests ranging from biofuels to processed foods, expects full-year operating losses in its sugar sector between 50 and 150 million euros.
'The downward trend in EU price levels has since accelerated substantially in recent weeks, leading to an unexpected deterioration in market conditions,' Südzucker said.
'A higher EU harvest expectation from the current 2024 processing campaign with a correspondingly higher sugar volume of the European market and a significantly lower global sugar market price are the reasons for the downturn.'
The company also expects sugar production costs to rise, which can only be passed to customers with delays.
