VIENNA, AUSTRIA — In the first half of the 2015-16 financial year, AGRANA reported on Oct. 8 that operating profit dropped 21% to €68.7 million ($77.3 million) from €87 million in the same period a year ago as a result of sugar prices.
Group revenue was €1.26 billion, down 1.7% from €1.28 billion in the same period a year earlier.
The Starch segment's profit was up 23.4% to €31.1 million, driven by the improved sales prices for ethanol. At the same time, average material costs for the Starch segment as a whole eased slightly yearonyear. Revenue for the segment in the first half of the year was €352.7 million, somewhat higher than the €351.2 million reported in the same period one year earlier.
While EBIT in the Starch segment improved markedly compared to the year-earlier period, and, in the second quarter, contributed to Group-level EBIT growth of 9.1%, revenue in the Sugar segment remained down amid the lasting low sugar market prices and led to the anticipated weaker EBIT result for Sugar.
"The current adverse sugar price situation had a strong impact on our results for the first half of the year. On the other hand, the present high ethanol prices are boosting operating profit in the Starch segment and thus for the Group as a whole,” said AGRANA Chief Executive Officer Johann Marihart. “As a result of the improved projected margin in the ethanol business, we were also able to raise our Group EBIT forecast for the full financial year. Once more, our strategy of diversification across the three pillars of Sugar, Starch and Fruit has proved invaluable in cushioning the effects of earnings fluctuations."
AGRANA said it continues to expect group revenue to remain steady in the 2015-16 financial year. For operating profit (EBIT), the group is now projecting only a moderate instead of a significant decrease, provided the ethanol price situation remains positive.
"We should be able to almost fully make up for the likely weak EBIT result in the Sugar segment through year-on-year EBIT growth in the Starch and Fruit segments. The improved outcome projected in our revised full-year forecast will also be made possible by other factors, such as lower campaign costs and energy savings," said Marihart.