Tereos warns that more problems are ahead following the low sugar price which has affected H1 results

Tereos is one of the largest sugar producers in the world. On Wednesday, it reported a 18% decline in its net profit for the first half of its fiscal year, due to a drop in the price of sugar and sweeteners. It also warned that the fall could continue in the second half of its fiscal.

Tereos released a statement saying that the group's net income fell to 196 millions euros for the six-month period ending September 30, and sales decreased 11% to $3,4 billion.

EBITDA (earnings before interest, taxes, depreciation, and amortization) fell 15% to 506 millions euros.

The results were affected by the decline in prices of starch and sweeteners on European markets, especially in comparison to the same time period in 23/24," the report said.

Tereos stated that the significant decline in recent contracted sales prices of sugar in Europe, and liquid sweeteners in comparison to the previous years would negatively impact the second-half results for the group.

Tereos results are in line with those of Europe's biggest sugar producer Suedzucker. Suedzucker also reported a decline in H1 results, and lowered earnings for the third quarter.

Tereos reported that sugar prices in Europe fell to around 450 Euros per ton, down from 700 Euros during the contracting season (July to October) and 860 Euros in the previous campaign. This was due to large imports mainly from Ukraine and an increase in sugar beet fields in Europe.

It said that the situation could change in 2019. Several European producers have pointed to a possible decrease in sugar beet land.

Tereos said that the impact of large fires which occurred in Brazil in August and affected 6% of Tereos sugar cane areas had been limited as some of the cane had already been harvested. Tereos had a large presence in the area.

It was reported that the group's net credit, which had been scrutinized on the bond market, now stands at 2,0 billion euros. This is down from 2.4 milliards euros as of March 31.

(source: Reuters)