Tereos covers costs with high sugar prices
2022.12.06 07:25
Tereos covers costs with high sugar prices
Budrigannews.com – On Tuesday, the French sugar group Tereos reported strong first-half results, including a net profit and a sharp increase in earnings. This was due to the fact that high prices for sugar and ethanol helped offset an increase in production costs.
In the year to September 30, Tereos, the world’s second-largest sugar producer by volume, reported a net profit of 133 million euros, up from a loss of 50 million euros the year before. Higher prices made up for a sharp increase in energy and raw material costs.
Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) increased by 132 percent to 464 million euros during the same time period.
In a presentation to bond holders, the company said that higher selling prices in its annual fixed-price contracts for B2B sales would lead to continued strong results at its sugar Europe branch in the second half.
Tereos should benefit from anticipated high prices and an increased sugarcane crushing volume of 17.3 million tonnes, up from 15.6 million tonnes in 2021, in Brazil, where it is one of the largest producers of sugar and ethanol.
Despite the fact that daily production capacity decreased as a result of Tereos’ decision to hibernate a plant in Brazil due to lower yields, it was stated that full-year output and sales volumes were still anticipated to exceed 2021/22.
It stated that Tereos has no direct exposure to the Ukrainian war.
The company’s net debt decreased to 2.24 billion euros from 2.28 billion euros at the end of the first quarter on June 30. It stated that the leverage ratio dropped to 2.4x, a record low.
However, due to an increase in working capital caused by higher costs, Tereos anticipates that its net debt will be higher on March 31, 2023, compared to March 31, 2022.
In October, Tereos stated that it would increase the price at which it purchases sugar beet from its members by forty percent from last year.
The group anticipated its sugar processing season by about a week in advance of potential energy restrictions this winter in the event that Russia stops providing gas.
Following Ludwig de Mot’s departure late in September, the third chief executive to leave the group in two years, Tereos did not name a new managing director. It stated that Gerard Clay will continue to perform the duty as Chairman of the Board of Directors until he is hired.
