French group Tereos, one of the world's largest sugar makers, has reported an 18% drop in its first-half net profit, pressured by a fall in sugar and sweeteners prices, and warned of a further decline in the second part of its fiscal year.
The group's net profit fell to €196 million in the six months to 30 September, while sales dropped 11% to €3.2 billion ($3.4 billion), Tereos said in a statement.
Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) shed 15% to €506 million.
'The results were impacted by the drop in sales prices on the European markets, particularly in the starch and sweeteners segments, compared to the same period in 23/24,' it said.
The significant drop in recently contracted sales prices for sugar in Europe and liquid sweeteners compared to the previous year would have a negative impact on the group’s second-half results, Tereos said.
Tereos' results were in line with Europe's largest sugar producer Südzucker, which also reported a slump in H1 results and flagged lower third-quarter earnings.
Sugar Prices
Sugar prices in Europe slid to around €450 per tonne from around €700 during the contracting period (July–October) and €860 in the previous campaign, pressured by large imports, mainly from Ukraine, and a sharp increase in sugar beet areas in Europe this season, Tereos said.
The situation could change next year, with several European producers pointing to a potential decrease in the sugar beet area, it said.
The impact of large fires in Brazil that hit 6% of Tereos' sugar cane area in August had a limited impact as some of the burnt cane has been harvested, Tereos, which had large activities in the region, also said.
The group's net debt, which has been under scrutiny in the bond market, stood at €2.0 billion, down from €2.4 billion on 31 March, it said.
