Nordzucker Regains its Former Strength

In the past 2010/11 financial year, Nordzucker generated consolidated revenues of Euro 1.8 billion to reach similar levels to the previous year despite the disposals of trade investments.

5/27/2011 --- Nordzucker AG has generated earnings before interest and tax (EBIT) of Euro 188 million in the past financial year. The consolidated net income of Euro 91 million for the financial year significantly exceeded expectations. This positive development was primarily attributable to the satisfactory market and sales situation in all three Group regions, as well as the rigorous consolidation measures implemented within the Group. The Group was able to amortise a significant level of financial liabilities earlier than planned.

In the past 2010/11 financial year, Nordzucker generated consolidated revenues of Euro 1.8 billion to reach similar levels to the previous year despite the disposals of trade investments. The earnings before interest and tax (EBIT) reached Euro 188 million (previous year 66). At Euro 91 million (minus 10), the consolidated net income for the year significantly exceeded the original targets. The reasons are primarily due to the high level of sales of quota sugar, and the significant cost effects of the efficiency boosting programme “Profitability plus”. All three Group regions made significant contributions to this result. This applies particularly to Nordic Sugar, the Nordic division, which worked very profitably in the past financial year.

Thanks to the good financial situation, Nordzucker was able to amortise earlier than planned loans totalling Euro 123 million. In total, the financial liabilities were reduced by Euro 400 million during the past financial year. This enabled the repayment of a large proportion of the loans taken out to finance the acquisition of Nordic Sugar.

On the basis of the generated earnings, the Annual General Meeting on 7 July 2011 will be asked to adopt a resolution to pay a dividend of Euro 0.46 per share. The company has therefore paid the shareholders a dividend in 13 of the 14 years that have passed since Nordzucker AG was founded in 1997/98.

“The rigorous further development of Nordzucker into an international company was an important part of our agenda in the past financial year. This meant that our core sugar business had to be strengthened further, alongside the optimisation of our trade investment structure. We successfully implemented both these objectives in close consultation with the supervisory board, and together with the good market situation, this produced the satisfactory performance in the past financial year. We are also going to press forward with our consolidation strategy within the Group with undiminished commitment: to harmonise all of the many processes in a standard IT platform; continue the implementation of the “Profitability plus” efficiency programme; and further promote the joint corporate culture,” explains CEO Hartwig Fuchs. It is important, especially in the light of the volatility on the commodities markets, and the tense supply situation in the EU, to raise the capacity utilisation of the Group’s refineries. “This includes ensuring that we grow by developing new sources of raw materials outside of the EU.”

The company’s growth into an international Group was enabled by a significant accumulation of shareholders’ equity: in only seven years (from 2003/04 to 2010/11) shareholders’ equity has more than doubled from Euro 375 to 777 million by the accumulation of reserves from profits. This was also made possible by the commitment and the far-sighted decision making of the current and former members of the supervisory board.

The global demand for sugar rises by almost two per cent every year. This is due to the increase in the global population, and growing affluence. At the same time, the energy markets are also having a growing impact on the world sugar market. The level of self-sufficiency in the EU for sugar has sunk to around 80 per cent as a result of the reform of the Common Market Organisation for Sugar. Around on fifth of the demand therefore has to be covered by imports. As a consequence, the expected continuation in the volatility of the global markets will continue to have a strong impact on the EU internal market.

The 20 20 20 project was initiated to strengthen the long term regional and supra-regional competitiveness of sugar beet as a crop. The aim is to enable the top 20 per cent of beet growers in all Nordzucker cultivation regions to produce 20 tonnes of sugar per hectare by 2020. Achieving this ambitious target requires very intense cooperation between Nordzucker and all beet farmers. It will also be necessary to develop focussed partnerships covering breeding, harvesting, storage, and cultivation structure and cultivation methods.

If business runs as normal, Nordzucker expects the annual result in the current financial year to be at least as high as in 2010/11. Volatile markets will continue to strongly influence the EU sugar market. And the lower sugar yields in the 2010/11 campaign will lead to lower revenues of non-quota sugar.

Rising prices though will compensate for this effect as a minimum. Hartwig Fuchs: “Through hard work in the past financial year, we have created prospects for further growth, at the same time as boosting our profitability. We have made good progress in pursuing our strategy, but there is still a lot of hard work ahead of us.”