14 Jun 2018 --- Tereos has reported resilient results in a market context characterized by sugar prices close to their lowest levels in a decade in the world and at a historic low in Europe following the liberalization of the market. In a profoundly mutating environment, the group results benefited from its outstanding operational performance, its international positions and the transformation program engaged. Meanwhile, with record production of 5.3 Mt of sugar, Tereos this year became the world’s second-largest sugar producer.
This performance results from the full capacity operation of its industrial tools in Europe and an excellent campaign in Brazil. The group’s starch and sweeteners businesses have in addition recorded an 11 percent growth in production, driven by plant proteins sales, developments in Asia, and the growth of our potato starch business in France.
Despite a drastic drop in prices, Tereos’ market share gains achieved in Europe and Brazil and the development of export activities, as well as its hedging policy on futures markets, have enabled the group to achieve the highest revenues in its history at almost €5 billion (US$5.9 billion), representing a growth of 3 percent over one year and 19 percent over two years.
Reaching its conclusion, the group’s performance plan for the period 2015-2018 delivered €140 million (US$165 million) of benefits, which is €40 million (US$47.2 million) more than the original target of €100 million (US$118 million).
The group’s EBITDA, therefore, stood at €594 million (US$701 million), a level very close to that of 2016/17 and showing growth of 35 percent over two years (€440 million in 2015/16). The operational margin was close to 12 percent. Over the past ten years, the group’s revenues have grown by 39 percent and it’s EBITDA by 66 percent, reflecting constant progress in operational performance.
The international and starch activities accounted this year for roughly 75 percent of group adjusted EBITDA. This reflects the success of Tereos’ efforts to develop new activities around its historical cooperative activities of beet sugar in France. The businesses of its Sugar International division, including those in Brazil, contributed more than 50 percent of group EBITDA.
Net income before result distribution (price complements) was positive, at €24 million (US$28.3 million). Following the Supervisory Board’s decision to distribute to cooperative growers, for the last campaign with quotas in France (2016/17), sugar beet price compliments of €42 million (US$49.6 million), which are accounted as a charge, published net income was -€18 million (US$21.2 million).
During the past financial year, Tereos continued to implement its strategy, which aims to reduce its exposure to the cyclicality of its markets, increase its competitiveness and take advantage of the profound changes occurring in its markets: emergence of new consumption areas and a decline in specific mature markets, new nutritional expectations for consumers, and rising expectations in society.
François Leroux, Chairman of the Tereos Supervisory Board, states: “The record sugarbeet campaign achieved in 2017/18 proves our capacity to play a major role in today’s deregulated market. It shows the strong commitment of Tereos’ cooperative growers and its employees. Bringing all 12,000 Group cooperative growers into a single cooperative, Tereos SCA, was one of the major advances made this year. Our model, which takes the interests of the entire industry into account, is solid and sustainable. We will vigorously pursue our cooperative mission to secure sugarbeet, potato and alfalfa cultivations in our cooperative owners’ farms, as they experience the deepest crisis since the beginning of market protection through prices.”
Alexis Duval, Chief Executive Officer of Tereos, also comments: “It is by carefully assessing the profound changes that have taken place in our environment and by anticipating them that we have today become the world’s second largest sugar-producing group. To enable us to keep a step ahead and to differentiate ourselves in an increasingly competitive environment, we must continue implementing our project to transform the company, to meet three key challenges.”
“The first of these is competitiveness in a market that has now become global, a challenge we intend to meet through our Ambitions 2022 plan. Next, we have to continue seeking to limit the impact of the price volatility inherent to our businesses by continuing our diversification, our international expansion and the development of the added value of our products and services. And finally, we must continue to adapt to the new nutritional issues by extending our product offer and our formulation capabilities, to provide our customers with innovative solutions that satisfy the new consumer demands,” concludes Duval.
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