Sugar group Tereos has reported higher third-quarter core earnings on the back of improving sugar prices, but the French company said factors including the coronavirus pandemic and a weak Brazilian real would curb profits in the year ahead.
Tereos, the world's second largest sugar maker by volume, is currently reviewing its strategy after a change of leadership in December that followed a legal tussle between former management and some of its cooperative members.
The group reported that adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) rose to €135 million ($163.85 million) in its third quarter to 31 December 2020, up 11% compared with the year-earlier period at current exchange rates.
That followed a sharp rise in core earnings in its first half.
Tereos did not include a third-quarter net profit figure, having reported a €6 million net loss for its first half.
Consolidated third-quarter revenues rose 2% at current exchange rates to €1.152 billion, supported by a record harvest volume in Brazil of 20.9 million tonnes of sugar cane, Tereos said.
Sugar Beet Harvest
But a poor sugar beet harvest in France, weakening starch margins in Europe, depreciation in the Brazilian real and uncertainty created by the coronavirus health crisis were all expected to weigh on Tereos' results for the full year 2020/2021 and the subsequent 2021/2022 year, it said.
"The Group is expecting its 2021/2022 adjusted EBITDA to be in the lower end of the previously communicated outlook (between €600 and €700 million)."
The group's net debt was €2.7 billion as of 31 December 2020, down from 2.913 billion a year earlier, but with a ratio of 4.8 times EBITDA that remained high, it said.
"The group has made deleveraging a priority. In this context, a review of the asset portfolio is underway," it said.
