* Tereos says Q1 adjusted EBITDA down 29 pct
* Says Europe sugar business worst hit by price drop
* French coop grappling with post-quota EU market (Adds details, background)
PARIS, Aug 23 (Reuters) - French cooperative group Tereos , one of the world’s largest sugar makers, reported a fall in quarterly earnings as historically low prices outweighed stronger volumes following the liberalisation of the European sugar market.
Tereos’ adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) in the first quarter of its 2018/19 financial year came to 84 million euros ($96 million), down 29 percent from 118 million in the year-earlier period, the group said in an non-audited results statement on Thursday.
Sales in the April-June quarter fell 5.2 pct to 1.059 billion euros as a 22 percent drop in average sugar prices outweighed a 12 percent increase in Tereos’ sugar volumes, it said.
Tereos did not disclose net profit figures.
European sugar firms have been hit hard by a plunge in international prices just after ramping up capacity to benefit from the abolition of European Union sugar quotas a year ago.
Credit ratings agency S&P on Thursday cut its outlook for Tereos to negative from stable, reiterating its ‘BB’ rating,
Tereos said in June it was considering selling a stake in the group to allow it to diversify further, both overseas and in non-sugar markets like starch.
The deteriorating sugar market has also sharpened tensions among Tereos’ farmer shareholders and the group last week announced the expulsion of three members following a public spat over the group’s diversification strategy.
Tereos said in its statement that its international sugar business and its starch and sweeteners activities helped cushion a sharp drop in adjusted EBITDA at its European sugar division to 20 million euros from 52 million a year earlier.
Sugar volumes were supported by its European factories working at full capacity following the ending of the EU’s sugar quotas, it said.
Weak prices were expected to continue weighing on the European sugar division while the international sugar branch was expected to remain more resilient, helped by operational improvements in Brazil and Brazilian ethanol prices, Tereos said.
For the upcoming European sugar beet harvest, the crop was currently expected to be around the average level of the past five years, it said, adding rainfall in the coming weeks would be important for plant growth.
$1 = 0.8744 euros Reporting by Gus Trompiz Editing by Alexandra Hudson and Kirsten Donovan