Südzucker International Finance B. V. Südzucker AG ... - Xetra

Group sales were slightly up in the first half of the 2003/04 fiscal year, at 5 2,239 (2,174) million. In thesugar segment, sales decreased by 5 9 million to 5 1,655 (1,664) million, primarily due to lower salesof the companies in Eastern Europe. Here, the changes of the market in the run-up to the EUaccession on May 1, 2004 negatively impacted prices, albeit this effect was softened by the first fullconsolidation of the Silesian SSC-Group in the second quarter. Furthermore, the increased C-sugarexport volumes from the 2004 crop season, negative developments of the world market price forsugar and the US dollar led to a reduction of sales year-on-year. In the specialties segment, salesincreased by 5 75 million to 5 584 (509) million. This increase of 14.7% year-on-year is primarilycharacterized by the further growth in functional food and the sustained boom in discount ownbrandbusiness at Freiberger. In addition, Freiberger has been included for five months due to thechange from the calendar year to the Südzucker consolidated financial year in the first quarter andAGRANA has been consolidated for the first time.Sugar segmentOverviewThe sugar segment is comprised of Südzucker AG, Südzucker International, Saint Louis Sucre,Raffinerie Tirlemontoise Group and AGRANA Group. The segment also includes the agricultural andfeedstuffs divisions.The following table shows certain key financial data for the Südzucker Group’s sugar segment:First Half of2003/04First Half of2002/03 2002/03 2001/02Sales . . . . . . . . . . . . . . . . . . . 5 million 1,655 1,664 3,359 2,758Operating profit . . . . . . . . . . 5 million 167 182 397 328Operating margin . . . . . . . . % 10.1 11.0 11.8 11.9Capital expenditures . . . . . . 5 million 129 60 135 102Investments in financialassets . . . . . . . . . . . . . . . . . 5 million 70 18 31 1,610In the fiscal year 2002/03, the sugar segment comprised the activities of 42 (45) ( 1 ) sugar factories,two of which were cane sugar refineries. The number of factories in the European Union decreasedto 25 (28) following the closure of two factories in Germany and the sale of one sugar factory inBelgium. In April 2003, the Südzucker Group acquired 14 sugar factories in Poland. Sugar beetprocessed throughout the Südzucker Group increased by some 19% to 29.7 million tonnes (25.0million tonnes), with an increase in the European Union of some 17% to 25.7 million tonnes (22.0million tonnes) despite the sale of the Veurne factory. Growth was mainly due to higher beet crops inGermany and France and acquisitions. The sugar content throughout the Südzucker Group was17.23% (16.77%), whereby the rate in Eastern Europe was some 2 percentage points below the EUcontent. Sugar production throughout the Südzucker Group increased by 17% to 4.7 million tonnes(4.0 million tonnes), due to the greater quantity of beet processed and higher sugar content.The operating profit for the sugar segment of 5 397 million in fiscal year 2002/03 is primarily due tothe first-time full consolidation of Saint Louis Sucre, whereas the developments in the other EUcountries were influenced by a decline in the sugar export business. The results of the EasternEuropean sugar activities varied, with different countries performing unevenly.In the first half of fiscal year 2003/04, the market adjustment occurring mainly in the EasternEuropean EU accrediting countries during the current transitional period until EU membership hasled to considerable price declines. In addition, the weak US dollar, in conjunction with low prices onthe global sugar market, negatively impacted the sugar export business. This was neithercompensated by the progressive realization of additional synergy effects within the SüdzuckerGroup nor by the increased export volumes as a result of the higher 2002 crop season. Accordingly,the operating result of the sugar segment was down considerably year-on-year, at 5 167 (182) million.( 1 ) Numbers in brackets relate to the previous financial year.24