Nordzucker AG: Good Financial Year Forms Basis For Further Growth
04 Jun 2014 --- Nordzucker reported another very good result in the 2013/2014 financial year, thereby laying the foundation for growth opportunities. At the same time, the company achieved its targets under the long-term “Profitability plus” programme ahead of schedule and has also paid off its debt in full.
This is an important requirement as the Group prepares for changes in the course of the market liberalisation starting in 2017, the effects of which are already being clearly felt.
Nordzucker generated consolidated revenues of EUR 2.361 billion in the 2013/2014 financial year (reporting date: 28 February), which was only slightly lower than in the previous year (EUR 2.443 billion). The operating result (EBIT) came to EUR 299 million (previous year: EUR 506 million) and includes the complete goodwill impairment of Nordic Sugar. The impairment loss was recognised in order to meet the lower yield expectations in future (post-Sugar Market Regime era from 2017) following some very profitable years and EBIT of EUR 184 million reported for Nordic Sugar in 2013/2014.
Although consolidated net income of EUR 209 million was down on the previous year (EUR 369 million), it remains at a very good level. The previous year’s net debt of EUR 59.4 million was paid off in full. As of the reporting date, cash and cash equivalents exceeded financial liabilities by EUR 52.4 million. Equity went up to EUR 1.386 billion (previous year: EUR 1.291 billion). While total assets were almost unchanged, the equity ratio rose from 53.7 per cent in the previous year to 59.3 per cent.
“We are very pleased with our key financial indicators. The last three years have been characterised by extremely strong yields, and we have taken advantage of these to further develop the company and strengthen its position,” emphasises CEO Hartwig Fuchs.
A dividend of EUR 1.30 per share will be proposed at the Annual General Meeting on 10 July 2014.
The stable revenues are largely due to increases in sales, which compensated almost fully for lower prices for quota and non-quota sugar. However, a clear downward trend in prices could already be seen in the last two quarters of the past financial year in particular. “These very good years are over. We are now in a period of transition that will prove to be challenging for us. At the end of September 2017, the sugar market regime will cease to exist in its current form. Indeed, the volatility of the global market is already having a much stronger impact on the EU sugar market now. This is an incentive for us to pursue our market opportunities even more rigorously, to focus on sustainability and transparency throughout the entire production chain, and to intensify our efforts to develop the company internationally, too,” stresses Hartwig Fuchs. The company will continue to rely on sugar beet cultivation in its three regions: “Our beet cultivation has a future, because sugar has a future. Our focus will therefore be on working closely with our farmers on the ground.”
All of the Group’s regions contributed consistently to earnings. As in the previous year, 44 per cent of revenues came from the Central Europe region, 40 per cent from the Northern Europe region and 16 per cent from the Eastern Europe region. “We are a European company that has local ties in the region, which produces locally and markets its products regionally. This creates value over the long term, even in structurally weak areas,” explains Hartwig Fuchs. The company invested more than EUR 79 million in the past financial year, primarily in the future viability of its plants. The focus here was on specific measures in terms of market and customer orientation, energy efficiency and environmental protection, as well as the expansion of silo capacities.
Stagnating sugar consumption and competition law in Europe are factors that limit further growth. For this reason, Nordzucker believes that the internationalisation of the Group beyond the borders of Europe is of key importance. Nordzucker has its sights on the growth regions of sub-Saharan Africa in particular, as well as on Asia.
At the same time, the company anticipates increasing competitive pressure as a result of lower global market prices and higher sugar stocks in the EU. Nordzucker expects its revenues and earnings to fall significantly in the next financial year.
“We will rely on our strengths: beet cultivation in competitive regions, successful customer relationships, committed employees, and shareholders who support the company’s strategy,” summarises Hartwig Fuchs.
