February 11, 2019 / 4:51 PM / 6 months ago

EU sugar industry needs consolidation -Cristal Union

* Prices fell sharply after production quotas ended

* Cristal Union CEO expects M&A activity next year

By Maha El Dahan and Dahlia Nehme

DUBAI, Feb 11 (Reuters) - The European Union’s sugar industry needs to consolidate to contend with the sharp fall in prices since the end of production quotas in 2017, the chief executive of French producer Cristal Union said on Monday.

The sector responded to the end of quotas by boosting production, adding to an already oversupplied global market and triggering a decline in prices.

The market’s woes were highlighted last month by Suedzucker , Europe’s largest sugar refiner, announcing plans to close two German plants as part of a restructuring programme.

Cristal Union’s Alain Commissaire told Reuters on the sidelines of the annual Dubai sugar conference that the seven big companies in Europe may be too many, adding that other sectors such as starch had fewer major players.

“We want to be part of the consolidation,” he said.

Seven companies account for the bulk of sugar production in the European Union: Suedzucker, Tereos, Nordzucker, British Sugar, Pfeifer and Langen, Cristal Union and Royal Cosun.

Commissaire said that some of the leading companies were not making money with sugar but had larger turnover in other activities so could consider selling sugar operations.

“You can say that everyone is watching everyone and even more so when some of us are in difficulties ... The next two or three years will be very interesting,” he said.

Commissaire said Cristal Union was experiencing a difficult financial year and would be “in the red”.

“But that’s not so important because we are in good financial shape,” he added. “There is no problem for us to have this kind of situation for one year, two years.”

Commissaire said he was not sure if there would be any mergers in 2019 but expects increased activity in 2020. (Reporting by Reporting By Maha El Dahan and Dahlia Nehme Writing by Nigel Hunt Editing by David Goodman)

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