October 12, 2017 / 6:35 AM / a year ago

UPDATE 1-Suedzucker's earnings rise, says hopeful for EU's new sugar market

(Adds details from paragraph three, adds cooment by company spokesman)

By Michael Hogan

HAMBURG, Oct 12 (Reuters) - Suedzucker, Europe’s largest sugar refiner, reported a 30 percent rise in second-quarter profits on Thursday on the back of higher revenues in both its sugar and biofuel businesses and said it was optimistic with the start of the European Union’s free market for sugar.

From this month EU farmers are free to grow as much sugar beet as they want and refiners are free to export sugar globally after decades of restrictive output quotas and export limits. Guaranteed minimum sugar prices also ended.

Suedzucker reaffirmed its previous forecast for operating profits in the current financial year of 425 to 500 million euros ($505-594 million), which compares with 426 million euros in the previous year.

Operating profits in the three months to end-August rose 29.6 percent to 128 million euros, net profit rose 9.1 percent to 86 million euros and sales rose 7.1 percent to 1.71 billion euros.

Analysts surveyed by Reuters had on average expected an operating profit of 131 million euros, a net profit of 68.3 million euros and sales of 1.75 billion euros.

“Suedzucker remains optimistic in the EU’s liberalised sugar market, which only started days ago,” a company spokesman said.

“We are already using the opportunities to expand beet production and increase the time our sugar factories are in production. The longer the factories can be kept occupied the better the cost factor.”

“We plan to use the new market freedom to increase exports outside the EU, which is important as sugar demand in the EU has been at a relatively stable level for years. But exports are made at world prices and along with opportunities swings in global sugar prices will also bring risks.”

New York white sugar futures hit a 2-1/2 year low in September on signs of a looming global supply glut but have since recovered.

Suedzucker expects to produce over 5 million tonnes of sugar in the harvest and production season this autumn and winter, up from 4.7 million tonnes last season, it said. The cultivated area for sugar beet has been increased by around 15 percent this year to about 440,000 hectares.

This is expected to keep the group’s sugar factories occupied for about 120 days this production season, up from about 107 days last season. ($1 = 0.8421 euros) (Reporting by Michael Hogan; Editing by Greg Mahlich)

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