Nordzucker Reports Loss in 2009/2010 Financial Year

This loss is attributable to considerable special effects arising in part from one-off expenses to streamline the trade investment portfolio (Serbia), effects from the acquisition of Nordic Sugar, as well as the reintegration of the Eurosugar sales and marketing activities.

27 May 2010 --- Nordzucker AG, Braunschweig, generated earnings of Euro 66 million from its operating business in the last financial year. At the bottom line though, the company made a loss of around Euro ten million because of special effects. In addition to an above average campaign across the Group, Nordzucker can look back overall on a successful operating business with satisfactory market developments.

In the 2009/2010 financial year, Nordzucker generated a consolidated turnover of Euro 1.8 billion (previous year: 1.2 billion) with the first consolidation of Nordic Sugar in the accounts. EBIT was Euro 66 million (79). The consolidated net income was minus Euro ten million (44). This loss is attributable to considerable special effects arising in part from one-off expenses to streamline the trade investment portfolio (Serbia), effects from the acquisition of Nordic Sugar, as well as the reintegration of the Eurosugar sales and marketing activities. Given the negative annual net income for Nordzucker AG, no profit appropriation proposal will be made at this year’s annual general meeting.

“The last financial year was a year of contrasts: problematic with respect to net income, annual profit and dividend; but also satisfactory in terms of the campaign, strategic orientation, and corporate growth,” explained the CEO Hartwig Fuchs. Nordzucker’s core operating business in particular developed positively with a good campaign and sugar production across Europe of 2.9 million tonnes.

The acquisition of Nordic Sugar on 2 March 2009 promoted Nordzucker to the position of second largest sugar producer in Europe, and expanded the previous core market to include an attractive sales area in northern Europe. “Nordic Sugar currently accounts for 40 per cent of the Group’s sales. This is a major contribution and highlights that we are continuously implementing our strategy: growth in our core sugar business. This was an ambitious and strategically important step,” added the CEO commenting on the developments during the last financial year.

To boost long term efficiency across the Group, Nordzucker has elaborated a programme (“Profitability plus”), that aims to continuously improve the earnings power. The package focuses on 400 already identified measures which will generate annual savings of Euro 67 million from 2014/2015. All divisions are affected: Production, Sales & Marketing, Purchasing and Human Resources.

The reintegration of sales and marketing became necessary at the beginning of 2010 because of the new scale of the company. Nordzucker had originally outsourced all of the sales and marketing activities to the Eurosugar joint venture in 2007 which it ran with two partners. Since the start of this year, a Group-wide sales and marketing management structure has been built up to optimally exploit all of the market potential in the product portfolio, distribution logistics, and customer requests.

The news from the market in the last financial year was that there was no strong rise in imports because of the high world market prices and the capacity problems of many ACP and LDC countries.

Nordzucker expects the pressure on prices in the EU to continue – this will make it difficult to pass on rising costs to customers, and could lead to further market consolidation. The company’s priorities for the 2010/2011 financial year include speeding up the Nordzucker/Nordic Sugar integration process, which is closely linked to boosting profitability across the whole Group.

Hartwig Fuchs: “We have a big job ahead of us where everyone has to play their part. Our goal is to become slimmer, faster and more efficient – to boost our profitability so that we can open up good prospects for further growth.”