France’s largest sugar producer Tereos has reported what the company describes as a sound performance in an environment less favourable than in 2012/13.
Revenues were €4.7 billion, with EBITDA of €691 million - the third best performance in the history of the Group – and net profit was €176 million.
“Despite a less favourable environment after two years of exceptionally high world sugar prices, Tereos is reporting good results: an EBITDA of 691 million euros which is the third best performance in the history of the Group,” said Alexis Duval, chief executive officer of Tereos. “This reflects Tereos’ strong assets to evolve in increasingly open and volatile markets. Our long-term strategy is designed to allow Tereos to remain among the most competitive producers in Europe and to take advantage of major drivers of growth thanks to our increasing international presence. This will enable us to seize opportunities both in our historic markets and in markets of emerging countries.”
“Sugarbeet yields for the 2013-2014 campaign were in the low average of the past five years,” said Thierry Lecomte, chairman of the supervisory board of Tereos. “But above and beyond these results, it is important to highlight long-term trends. Sugarbeet yields have been increasing regularly for years thanks to progresses in agronomy, agricultural practices and genetics. Tereos has successfully experimented major innovations such as simplified sugarbeet sampling process and a new soil tare incentive system, which will be extended to all plants in the upcoming campaign. These are some of the factors which will be essential for our competitiveness going forward and which will enable us to operate in a more open market and without quotas.”
Processing of sugarbeet was up 3.3% over the previous year; cereal processing was up 4%; and 5.9% sugarcane was processed.
In its outlook for the next financial year, Tereos said that production is expected to benefit from an increase in surfaces for the 2014/15 campaign. The simplified sugarbeet sampling process and the new incentive system to encourage improvements in the quality of the sugarbeet (reduction of soil tare, use of new varieties with higher sugar content) will be expanded to all French sugar production units starting with the 2014 crop. In addition Tereos zid that it will continue to foster discussions in the industry on the simplification of reception (measurement methods). The Group will continue its investment program aimed at reducing energy consumption and CO2 emissions. The methanization unit in Dobrovice (Czech Republic) should start its operations by the beginning of the next campaign; its biogas production covering 100% of the energy requirements of the distillery.
In Brazil, the outlook for the current sugarcane crop points to an increase in volumes of around 4% (around 20.5 Mt). Volumes of bio-electricity are expected to continue to rise with the Tanabi cogeneration unit starting its operations. The Group continues to implement the Guarani 2016 competitiveness plan aimed at increasing agricultural and industrial production and developing bio-electricity from cogeneration.
In the cereals market in Europe, where Tereos believes the economic environment remains slow, the benefits of the Performance 2015 competitiveness plan will gather pace during the year. In Brazil, the Palmital unit will continue to ramp up production. In China, the Dongguan unit will start production during the second half of 2014. In Indonesia, the integration of Redwood is now underway with an operational improvement and product diversification plan.
According to Tereos, world sugar consumption continues to rise by around 2.5% a year, driven by the population growth of the emerging countries. 80% of world sugar production now comes from sugarcane, and Brazil alone accounts for more than 40% of world sugar exports. After four years of excess production, the world’s sugar inventories reached a record level in September 2013, leading to a decline in the world price. The European market, which is now in structural deficit after the 2006 reform, is now largely dependent on imports. In 2013/14, the lack of growth and regulatory measures taken by the European Commission also led to an increase in inventory levels, which weighed on quota sugar prices. In June 2013, the European Union bodies announced the end of sugar and isoglucose quotas on September 30th, 2017.
World production and consumption of starch-based produced are increasing driven by Asia, and China in particular which now accounts for nearly 33% of world production. Demand in Europe is sluggish, mainly owing to the economic situation. Price trends in most of the starch-based product segments are still affected by the volatility of cereal prices.
In 2013, world alcohol production (bioethanol and traditional alcohol) rose by 4% over 2012. Demand remained steady in Brazil, driven by the growth of the automobile market (with nine new cars out of ten equipped with Flex-fuel engines) and the increase from 20% to 25% of the blend rate of bioethanol contained in gasoline. On the European market, prices were down sharply owing to a decrease in gasoline consumption and an increase in duty-free imports.
