French sugar group Tereos reported strong first-half results on Tuesday, including a net profit and a sharp rise in earnings, as high sugar and ethanol prices helped offset an increase in production costs.
Tereos, the world’s second largest sugar maker by volume, posted a net profit of 133 million euros in the year to Sept. 30, compared with a year-earlier loss of 50 million euros, helped by higher prices that compensated for a sharp rise in energy and raw materials costs.
Over the same period, adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) rose 132% to 464 million euros.
In a presentation to bond holders the group said it expected strong results at its sugar Europe branch to continue in the second half due to higher selling prices reached in its annual fixed-price contracts for B2B sales.
In Brazil, where Tereos is among the largest sugar and ethanol producers, the group should benefit from expected high prices and a higher sugarcane crushing volume, at 17.3 million tonnes, up from 15.6 million tonnes in 2021.
Tereos’s decision to hibernate a plant in Brazil to maximise its margins amid lower yields led to a fall in daily production capacity but full year 2022/23 output and sales volumes were still expected to rise above 2021/22, it said.
Tereos has no direct exposure to the war in Ukraine, it said.
The group’s net debt fell 128 million from a year earlier and 131 million from the end of the first quarter on June 30 to 2.24 billion euros. The leverage ratio fell to 2.4x, an historically low level, it said.
However, Tereos expects its net debt at March 31, 2023 to be higher than at March 31, 2022 as higher costs led to a rise in working capital.
Tereos said in October it would raise the price at which it will buy sugar beet from its members by 40% from last year.
The group anticipated its sugar processing season by about a week ahead of possible energy restrictions this winter if Russia cuts off gas supplies.
Tereos did not announce the name of a new managing director following the departure of Ludwig de Mot late September, the third chief executive to leave the group in two years. Pending recruitment, Gerard Clay will continue to perform the role in his capacity as Chairman of the Board of Directors, it said.