The European Commission Announces Sugar Quota Reduction
The quota reduction is introduced to bring down the massive sugar surplus in Europe, which is a result of the voluntary quota renunciation under the EU restructuring fund being far from the expected level.
26/02/07 Danisco has said that the European Commission has decided to introduce a temporary quota reduction of approximately 2 million tonnes of sugar for the 2007/08 campaign.
This is equivalent to an average of 12% of the total EU sugar quota, taking into account countries already having sold quotas back to the EU. The quota reduction is introduced to bring down the massive sugar surplus in Europe, which is a result of the voluntary quota renunciation under the EU restructuring fund being far from the expected level.
Danisco sees the decision of the European Commission as a necessary step to restore the balance on the market, but Danisco would have liked a permanent quota reduction, which could have restored the market balance faster.
The announced temporary quota reduction will have a significant impact on earnings in the sugar division in the coming financial year, but it will have no influence on the results of the 2006/07 financial year, Danisco reported.
The restructuring of Danisco’s sugar production aimed at adjusting activities to the new EU sugar regime is progressing according to plan, with three factory closures completed as planned and the integration of administrative functions in Denmark and Sweden being well underway.
Danisco sustains its long-term expectations for future sugar revenue of around DKK 5.5 billion and an EBIT margin of minimum 10%, once the market balance has been restored.
Danisco releases results for Q3 2006/07 on 20 March 2007.
