Strong Q1-Q3 for Agrana driven by sugar and starch segments

By Kacey Culliney

- Last updated on GMT

Sugar and starch drive growth for Agrana, fruit segment weaker
Sugar and starch drive growth for Agrana, fruit segment weaker

Related tags: Income, Sugar, Revenue

Favourable market trends and successful business strategies have driven strong profits in Agrana’s sugar and starch segments, creating 20.2% growth for the first three quarters of 2011|12, the CEO said.

Sugar giant Agrana pegged revenue for Q1-Q3 at €1,952.2 million with Q3 bringing in revenues of €667.6m, although it faced on-going challenges in its fruit preparations business.

Johann Marihart, CEO of Agrana, said that market trends, particularly in the sugar industry, had proved favourable for business.

Higher input market prices had driven sugar costs up, enabling the company to more or less double its operating profit, Marihart told FoodNavigator.com.

Minus exceptional costs, Agrana noted a 13.6% operating margin for its sugar segment, up from 4.6% from the same period last year.

The situation in Brazil, with fewer farmers planting due to rain, droughts and lower prices for cane sugar, is the main reason for an increase in market prices, Marihart said, and this is “something we think will not change very much in the next year.”

Sugar strengths

Timely sugar sourcing in the world market as well as the availability of non-quota sugar also helped sales, the company noted.

Marihart added: “We also gained import licenses for all sugars for refining, and were therefore in a position to refine and sell a lot more on the market.”

Agrana’s sugar segment pulled in revenues of €691.4m for Q1-Q3, up from €560.1m on the previous year.

The European sugar market is stable, Marihart said, with the global market mounting 1-2% each year due to population growth, a trend that will indirectly benefit Agrana due to global sourcing policies.

Starch strengths

Overall starch revenues were €587.5m for Q1-Q3, up from €424.6m for last year’s period, with production facilities in Austria, Hungary and Romania generating good earnings.

Higher market prices for all major groups of core and by-products, influenced by the sugar market, also drove revenue.

Alluding to the weaker fruit segment of the business, Marihart said that it was not the fruit concentrate side of the business, but rather the fruit preparations for the dairy industry that had declined.

There had been a decrease in consumption, he said, particularly in the premium and value-added dairy sector.

Marihart said that while losses in the fruit segment cannot be compensated, he had confidence in driving growth in Q4 as well as next year, in what he described a “stagnating and declining market”.

He added: “The strategy of our company is to have at least three legs, and one leg is currently a little weaker. In the past it was vice versa, with sugar being weaker.”

Expected revenue for the full 2011|12 financial year, is forecast at €2.5 billion, up from €2.17bn in 2010|11.

Related topics: Manufacturers

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