Südzucker FY Preliminary Operating Result Falls

28-Mar-2019 - Germany

Südzucker AG (SUEZF.PK) reported that preliminary Group operating result for financial year 2018/19 decreased to about 25 million euros from the previous year's 445 million euros. The earnings decrease was caused especially by the sugar segment. Group revenues declined to 6.75 billion euros from 6.98 billion euros last year.

Reason for the executive board's restructuring plan, agreed by the supervisory board of Südzucker on 25 February 2019, was a change in assessment of the global and EU sugar market development. In light of this new assessment of the sugar market environment, the sugar segment goodwill value (previous year: EUR 780 million) examination was renewed. Write-down requirements will amount to about EUR 700 million. Besides this, another about EUR 150 million restructuring expenses will be incurred, of which about EUR 100 million write-downs will apply to fixed assets.

On group level Südzucker expects an EBITDA of about 350 million euros, compared to  758 million euros reported last year.

The executive board decided to propose a dividend of 0.20 euros (previous year: 0.45 euros) per share for financial year 2018/19. The dividend proposal is subject to the respective resolution by the supervisory board on 15 May 2019 and the annual general meeting on 18 July 2019.

In light of highly volatile sugar and ethanol markets, guidance for financial year 2019/20 is marked by a high degree of uncertainty.

Currently Südzucker expects for financial year 2019/20 group revenues of 6.7 billion euros to 7.0 billion euros and a group operating result range of 0 euros to 100 million euros.

Südzucker expects another operating loss in segment sugar of -200 million euros to -300 million euros. Südzucker estimates a significant revenue sales driven earnings improvement from October 2019, the beginning of the new sugar marketing year.

The guidance includes only minor cost savings out of the restructuring plan which should amount up to 100 million euros midterm depending on the sugar world market price. On the other hand Südzucker expects earnings to increase in the special products and fruit segments. CropEnergies segment is expected to reach an operating result in a range of 20 million euros to 70 million euros.

Despite the current difficult framework for sugar Südzucker expects a group EBITDA of 360 million euros to 460 million euros, including adjustments from the application of IFRS 16. The full report for financial year 2018/19 will be published on 16 May 2019.

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