Europe's biggest sugar producer, Südzucker, has 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 May 31, compared to €282 million in the year-ago quarter.
Its sugar, CropEnergies biofuel and starch segments all recorded a decline in earnings, it said.
Impact Of High Costs
Südzucker had warned in April that high costs, ranging from energy, raw materials, logistics to packaging, combined with weak sugar markets, would cause a fall in earnings for the first quarter.
The company warned on Wednesday that its second quarter earnings would decline, without providing concrete numbers.
Sugar futures hit 18-month lows in May on expectations of large sugar harvests in Brazil but have since recovered slightly.
Südzucker's sugar revenues rose 16.5% to €1.076 billion despite falling prices, with "substantially higher" exports from the EU to global markets a major factor, it said.
The company also affirmed its previous forecast that full-year group operating profit would fall to between €500 million and €600 million, from €947 million in the previous fiscal year, which ended in February.
It forecast full-year sugar sector operating profit would fall to between €200 million and €300 million, from €558 million last year, burdened by rising costs and expected low prices.
Market Volatility
Südzucker said results still depended on market volatility caused by the war in Ukraine. The EU gave Ukrainian agricultural products, including sugar, duty-free access to the EU market and although volumes have been restricted, the impact on markets remains uncertain, it said.
The group's sugar beet cultivation area will increase 'moderately' for the autumn/winter 2024 harvest compared to the previous year, it said, with an average harvest expected overall.
