Tereos Warns Of Weaker Results As EU Sugar Prices Plummet
Tereos, the French sugar maker, expects weaker results in the second half of the year due to a sharp fall in European sugar prices, driven by large imports of cheaper Ukrainian sugar and a rising EU beet crop. Tereos plans to double its sugar exports outside the EU to offset the surplus, aiming for 350,000 tonnes.
A bigger-than-expected fall in European sugar prices in recent months due to large supplies will weigh on the results of French sugar maker Tereos in the second half and prompt it to boost exports, Tereos chief executive Olivier Leducq told Reuters.
The EU market has suffered from large imports of cheaper Ukrainian sugar in the past two years. The EU executive put a brake on shipments of Ukrainian sugar but imports have remained about 10 times higher than they were before Russia invaded the country.
Meanwhile EU sugar output is expected to rise 6% this year as farmers, encouraged by high prices, increased beet plantings. Tereos however, expects its sugar beet output to fall slightly as the area sown by its cooperative members remained nearly stable and yields fell due to late plantings and poor sunshine.
Tereos expects sugar beet yields this year at about 79 tonnes per hectares, down from 80.1 last year, Tereos chair Gerard Clay also told Reuters in a joint interview.
Pressured by the large EU beet crop and Ukrainian sugar influx European sugar prices came off their record highs in recent months, with spot prices trading at around €500 a metric tonne, down from €950 a tonne in September 2023.
“We are entering a much more complicated period, we cannot have market prices that are halved, that fall by 40% or 50% and maintain the same level of results,” Leducq said.
Good Sales, Price Levels
The price environment already deteriorated since the second quarter on the sugar and starch market but performances were better in Brazil where the group has large sugar and ethanol activities, helped by good sales and good price levels, he said.
Tereos, which makes sugar, starches and ethanol, had posted a record annual profit in the year 2023/24 that ended on March 31 due to high sugar prices and improved margins.
Tereos’ warning is in line with Europe’s largest sugar producer Südzucker last week reported a 63% fall in quarterly operating profit and cut its full-year earnings forecasts on weak sugar markets.
The French group intends to double its sugar exports outside the EU this season to 350,000 tonnes to deal with the expected surplus in the bloc – the first since 2017/18 – Leducq said, urging other European producers to follow suit.
“The market is not expandable because consumption is not increasing in Europe, so everything that overflows must be sold for export,” Leducq said.
The bloc should export about 2.5 million tonnes of sugar this year, compared to an average 1/1.5 million in other years, which should easily find a market as global demand continues to grow, Leducq said.
He also said that the group had finalised the sale of its UK retail business to T&L Sugars after nearly a year of inquiry by the UK watchdog CMA.
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