Earnings position

After a record year in 2012/2013 with exceptionally high yields, profitability in the reporting year 2013/2014 was much lower, but still good. Earnings declined sharply over the course of the year, however. In addition to much lower prices for quota and non-quota sugar, the result was depressed by high production costs.

Consolidated revenues
Consolidated revenues (bar chart)

Total operating profitability is calculated by dividing EBITDA (operating result before depreciation, amortisation and impairment) by revenues. This year, the figure was 20.0 per cent (previous year: 24.3 per cent), which was above the target of 15 per cent.

The return on sales, calculated as net income (after minority interests) divided by annual revenue, came to 8.5 per cent in the reporting year compared with 14.7 per cent in the previous year. This was again well above the target of five per cent.

The return on sales includes an impairment loss of EUR 89.0 million on the goodwill of Nordic Sugar, which has therefore been written off in full. In recent years, Nordic Sugar has contributed to the Group’s performance with excellent earnings. Declining prices on Scandinavian markets and the end of the sugar market regime in 2017 have considerably lowered expectations for the future, however. Nordic Sugar is still expected to generate positive earnings in future, but at a much lower level, and this change in the market outlook required an impairment charge to be recognised on the goodwill.

Adjusted for this impairment, the return on sales came to 12.3 per cent.

Consolidated EBIT
Consolidated EBIT (bar chart)

Revenues came to EUR 2,360.9 million, a slight decline of EUR 81.9 million on the previous year’s figure of EUR 2,442.8 million. Revenues of EUR 1,746.9 million were generated with quota sugar. Quota-sugar revenues were therefore just EUR 4.0 million down on the previous year’s figure of EUR 1,750.9 million. Steep falls in prices at times were almost fully offset by higher sales volumes.

It was not possible to repeat the high sales volumes of non-quota sugar in the previous year. Together with the equally sharp fall in prices, this caused revenues to go down by EUR 50.8 million to EUR 210.2 million (previous year: EUR 261.0 million).

Revenues of EUR 109.6 million from the sale of bioethanol were down on the previous year (EUR 117.1 million), largely due to lower prices. Revenues from by-products include revenues from the sale of molasses and animal feed (dried pulp pellets and pressed pulp), which fell by EUR 11.1 million to EUR 188.2 million. The reason for the decline was mainly lower sales volumes, especially for dried pulp pellets, while prices were stable or slightly higher.

Other revenues fell from EUR 114.6 million to EUR 106.0 million. Lower seed revenues due to a change in sales processes were the main reason for the fall.

At the end of the reporting year, the production costs amounted to EUR 1,707.3 million (previous year: EUR 1,663.3 million). This rise of EUR 44.0 million was due to the higher sales volumes for quota sugar, on the one hand, and the increases in purchasing volumes for sugar on the other.

Sales costs rose by EUR 9.5 million, largely due to higher transport costs in connection with the higher sales volumes of quota sugar.

Consolidated EBITDA
Consolidated EBITDA (bar chart)

Administrative expenses went down from EUR 91.0 million to EUR 85.1 million in the reporting year. Lower rents for administrative buildings and lower personnel expenses contributed to this reduction.

Production costs, sales costs and administrative expenses include EUR 196.8 million in personnel expenses (previous year: EUR 201.5 million) and EUR 81.3 million in depreciation of property, plant and equipment (previous year: EUR 86.8 million).

Other income came to EUR 46.8 million and was therefore well above last year’s figure of EUR 28.7 million. The increase is due primarily to the capitalisation in the reporting year of claims for the repayment of production levies for previous years. The Nordzucker Group recognised other operating income of EUR 17.3 million for this item.

Other expenses came to EUR 140.8 million at the end of the reporting year and were therefore well above the previous year’s figure of EUR 44.8 million. In the reporting year, it became necessary to write off the goodwill of EUR 89.0 million resulting from the acquisition of Nordic Sugar. This impairment charge was recognised in other expenses. This item also includes a fine of EUR 8.5 million resulting from an investigation by the German competition authorities, which has since been closed, and an equalisation payment of EUR 7.5 million in connection with claims for the repayment of production levies.

In total, the Nordzucker Group reported an operating result (EBIT) of EUR 298.9 million, as against EUR 506.3 million in the previous year. The operating result before depreciation, amortisation and impairment (EBITDA) came to EUR 472.6 million (previous year: EUR 593.8 million).

Consolidated net income
Consolidated net income (bar chart)

Financial income rose significantly by EUR 5.2 million to EUR 19.7 million, partly due to interest income of EUR 4.8 million in connection with forecast repayments of production levies from previous years. In addition, the Nordzucker Group received much higher dividends from its Czech investment Tereos TTD a.s., because a second dividend was paid due to the change in the financial year.

Financial expenses are largely made up of interest and similar expenses. A further improvement in the financing structure meant that financing costs decreased.

The increase in the tax ratio to 31.1 per cent (previous year: 25.3 per cent) stems mainly from the impairment loss on goodwill, which is not tax deductible.

In total, Nordzucker reported net income before minority interests of EUR 208.7 million, as against EUR 368.7 million in the previous year. After deduction of minority interests, this resulted in consolidated net income of EUR 201.3 million, compared with EUR 359.4 million in the previous year.