Suedzucker, Europe’s largest sugar refiner, said on Thursday it had raised its full-year earnings forecast because of higher bioethanol prices, but said the sugar market was depressed and was likely to remain so.
EU ethanol prices rose from about 535 euros a cubic metre in early June to 560 euros at the end of August, with rising demand meeting a supply shortage, Suedzucker said.
The company’s bioethanol unit CropEnergies posted a first-half operating profit of 40 million euros against a loss of 4 million euros a year previously.
“The recent significantly higher ethanol sales revenues in comparison to last year’s low level combined with lower net raw material costs more than offset the lower volumes,” it said.
The production standstill at its British bioethanol plant in Wilton had generated cost savings, it said.
The company said it expected group operating profit to reach 180 million euros to 230 million euros ($202.6 million-$258.8 million) in the fiscal year to end-February, confirming its previous announcement on Sept. 22.
It had previously forecast group operating profit at between 50 million euros and 150 million euros.
Suedzucker’s operating profit last year was 181 million euros.
Suedzucker also said it expected financial year 2015/16 group sales of 6.2 billion euros to 6.4 billion euros against the previous year’s 6.8 billion euros.
Suedzucker group operating profit in its fiscal first half ended Aug. 31 fell to 134 million euros from 147 million euros a year previously, largely due to difficult sugar markets.
The EU sugar market has been depressed by large supplies following a bumper harvest last year and lower prices, especially in south Europe.
Suedzucker said its sugar division posted a first-half operating loss of 13 million euros against a profit of 68 million in the same period last year.
Prices of sugar produced inside the EU’s production quotas are lower than during the same time last year although prices have stabilised, it said.
Export prices for sugar produced outside the EU production quotas were also lower than last year as world market prices retreated, it said.
The sugar sector is expected to remain depressed in the rest of the fiscal year, it said.
“We expect the sugar segment’s revenues to again be sharply lower, since sales revenues have again declined since the beginning of the 2014/15 sugar marketing year on Oct. 1, 2014, and this will now impact the full year,” it said.