Suedzucker 2nd-Qtr Net Rises on Gains in Ethanol Unitadmin
Suedzucker AG, the world’s biggest sugar processor, said second-quarter profit advanced 1.9 percent, the first gain in more than a year, as the costs of expanding into ethanol production fell.
Net income rose to 63.4 million euros ($79.4 million) in the three months ended Aug. 31, from 62.2 million euros a year earlier, Mannheim, Germany-based Suedzucker said today on its Web site. Sales climbed 3 percent to 1.45 billion euros.
Suedzucker is among sugar companies moving into production of ethanol, an alternative vehicle fuel, as the European Union cuts guaranteed sugar prices. The company’s non-sugar business had a loss in last year’s second quarter, mainly related to the opening of a bioethanol plant at Zeitz in Germany. It wasn’t repeated this quarter.
“The positive result in the bioethanol business will improve further on a full-year basis,” Suedzucker said in today’s statement.
The gain in quarterly profit is Suedzucker’s first since the three months ending November 2004. The European Union agreed to cut sugar prices last year after Brazil, the world’s biggest exporter, won a World Trade Organization ruling preventing growers in Europe from exporting their surplus.
Second-quarter profit was still below the 66 million-euro median estimate of four analysts surveyed by Bloomberg News.
Shares of Suedzucker fell 16 cents, or 0.8 percent, to 19.24 euros at 10:35 a.m. in Frankfurt. They have climbed 3 percent in the past year.
Suedzucker’s Cropenergies AG unit, a producer of alternative fuels from sugar beets, wheat and other crops, said today it had net income of 3.4 million euros in the first six months of the year, after a loss of 11.3 million euros a year earlier. Cropenergies raised 200 million euros in an initial public offering last month to expand in Belgium and France.
Operating profit from sugar dropped 7.3 percent from a year earlier to 83.8 million euros, Suedzucker said. Operating profit from ethanol and other special products rose 54 percent to 26.8 million euros as sales climbed 22 percent to 369.4 million euros. Sugar accounted for 61 percent of Suedzucker’s sales and 68 percent of operating income in the quarter.
“The results reinforce our confidence in our operating profit forecasts for the full year,” Goldman, Sachs & Co. analyst Mark Lynch in London said in a report today. “Suedzucker retains a significant opportunity to surprise on the upside from both its sugar and biofuels operations over the next few years.”