PARIS (Reuters) - French sugar producer, Cristal Union, said on Thursday it tipped into the red last year and plans to shut two factories in France as it expects global oversupply to continue pressuring prices.
The closures, which will take place next year, are the latest sign of restructuring in Europe’s sugar industry following the end of EU production and export quotas in 2017, which prompted many producers to boost output just as prices collapsed amid high world stocks.
“We have understood that there was too much sugar cane and sugar beet on earth to produce the sugar that the world needs,” Alain Commissaire, chief executive of France’s second-largest sugar producer, told Reuters in an interview.
The closures were also linked to the group’s poor financial results in the past year due to a drop in the sugar beet crop and historically low sugar prices, Commissaire said.
Cristal Union recorded a loss of 99 million euros ($111 million) in its 2018/19 year to Jan. 31, compared to a net profit of 135 million euros in the previous year, he said.
He expected sugar production to keep rising in Brazil, India, and Thailand and neighboring countries.
Cristal Union plans to shut its sugar factory located in Bourdon in Central France, which produces 40,000 tonnes of sugar a year, and halt output in Toury, southwest of Paris, which makes 65,000 tonnes of sugar a year.
The cooperative will also reduce activity at the Erstein packaging factory in Alsace.
The closures would take effect next year after the harvesting and processing of the 2019 sugar beet crop, Commissaire said.
Unions were informed about the restructuring plan on Wednesday and it was approved by the group’s board on Thursday.
Commissaire did not expect sugar prices to rebound significantly from the historic lows near which they are hovering currently.
“This means we have no solution than to think of a new industrial model that will allow us to live with these prices,” he said.
Two months ago, Suedzucker, Europe’s largest sugar refiner, said it would halt sugar production at two factories of its French branch Saint Louis Sucre, as part of a wider restructuring plan which also includes closures in Germany and Poland.
France’s largest sugar maker Tereos has said it has no plans to close factories in France.
Commissaire had told Reuters in February that the “golden age” for EU sugar producers was over and that he expected significant changes in the EU sugar sector.
Reporting by Sybille de La Hamaide, editing by Gus Trompiz and Susan Fenton