Management Report - Nordzucker AG

Management Report
Outlook
34
Our chief objective for the year
2004/2005 will be the consolidation
of our operations as well as the
strategic orientation of the company
with the aim of consolidating our core
activities in the long run. With the accession
of ten new member states to the
European Union on 1 May 2004, and the
gradual coming into force of the EU
sugar market regulations in these countries,
it will be essential for us to proceed
with the integration of our commitments
in Poland, Slovakia and Hungary into
the Nordzucker AG organisation. To be
able to maintain the earning capacity of
the company, we aim at a long-term and
organic growth. We see growth potential
for our core activities in the sugar sector,
but also for a market- and customeroriented
expansion of our competence
in sweetening products. Starch saccharification
products and Tagatose are first
steps in this direction.
EU Beet Cultivation and Sugar
Production Must Remain Profitable
Much of our attention is being directed
at developments in the agricultural
reforms that are at the present up for
discussion. In addition to the agreed
opening for imports from the least developed
countries (LDC) and the WTO
negotiations which are still pending, other
uncertainties surround the legal action
brought by Brazil, Thailand and Australia
against certain sugar exports of the
European Union (WTO panel). The
European sugar industry together with
politicians from all member states are
called on to arrive at appropriate and
reasonable solutions. Our joint efforts
have to be directed at maintaining the
profitability of beet cultivation and sugar
production in the EU. While the EU
Commission favoured price reductions
and tariff protection in the beginning,
there is now a tendency to prefer quotas
for all involved. The first tentative decisions
are expected for early 2005.
Restructuring Programme in East
Europe Due to be Finalised
In March 2004 we decided to discontinue
beet processing in the sugar factory
Hatvan in Hungary. After the closure
of the Trnava plant in Slovakia after the
2004 campaign, our eight Nordzucker
factories in Germany, two sugar factories
each in Poland and Hungary, as well as
one factory in Slovakia provide a sound
basis for competing for markets and customers
in the expanded European Union.
Much of the future developments will
depend on the revised contents of the
EU sugar market regulations.
Changed Beet Flows 2004
The closure of the Schleswig factory will
reduce the overall processing capacity of
Nordzucker AG to some 90,000 (97,000)
metric tons of beets per day of the campaign.
As with previous plant closures,
this reduction will also affect the catchment
area for the remaining factories.
For this reason alone we expect the 2004