Frozen pizzas keep Südzucker on track

Problems in the sugar business

09-Oct-2020 - Germany

Südzucker believes that, thanks among other things to the good performance of its frozen pizza business, it is on track to meet its annual targets after six months. The food and sugar producer can also build on better results in the biomass business, which is bundled in the listed bioethanol subsidiary CropEnergies. The sugar business, on the other hand, continues to pose problems - the group definitely expects to post a loss in the current financial year, having previously considered a profit possible. Investors reacted disappointed. Shortly after the start of trading, shares slumped by almost nine percent to EUR 15.11. They had last cost less in mid-August.

Photo by Sharon McCutcheon on Unsplash

Price negotiations in the sugar segment were probably less successful than Südzucker had expected, Oliver Schwarz of Warburg Research explained. The company had not been able to raise prices as planned.

Throughout the group, the positive and negative effects in the individual divisions offset each other, so that the forecast was confirmed. The company, which is listed on the SDax <DE0009653386>, announced in Mannheim on Thursday that sales in the current fiscal year 2020/21 are expected to rise to between 6.9 and 7.2 (previous year: 6.7) billion euros. Operating earnings are still expected to range between 300 and 400 million euros, compared to 116 million euros in the previous year.

In the first six months, sales rose slightly to 3.35 billion euros. Operating earnings rose by around three quarters to Euro 129 million. The company thus fulfilled the expectations of the experts in terms of sales. The operating result, on the other hand, was worse than analysts had expected. According to stock traders, the reason for this was the weak earnings in the sugar division.

Indeed, the performance of the individual divisions varied widely in the first half of the year. For example, the largest segment, special products, continued to benefit from the high demand for frozen food. In this segment, operating profit in the first six months rose by almost a fifth to 103 million euro. Südzucker also earned more operating profit with its bioethanol subsidiary CropEnergies. It had already raised its annual forecast in September. However, operating profit in Südzucker's fruit processing division has recently declined.

In the sugar division, the operating loss could at least be reduced due to higher prices. However, Südzucker now expects an operating loss of between EUR 50 million and 100 million (previous year 236) million for the current year. Previously, the forecast for the division had anticipated a minus in operating business of 40 million euro to a profit of 60 million euro. The forecasts for the special products division and CropEnergies./zb/ngu/mis

Note: This article has been translated using a computer system without human intervention. LUMITOS offers these automatic translations to present a wider range of current news. Since this article has been translated with automatic translation, it is possible that it contains errors in vocabulary, syntax or grammar. The original article in German can be found here.

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