VIENNA, AUSTRIA — AGRANA Beteiligungs-AG reported on May 13 that operating profit for the 2014-15 financial year was down 27% to €121.7 million ($137.8 million), mostly due to declining sugar prices.

Revenue was €2.49 billion, down 12% from €2.84 billion. Starch revenue was €700.1 million, or slightly below the year-earlier amount. The decrease resulted primarily from lower sales prices for ethanol and starch saccharification products. EBIT showed an uptick of 0.4% to €54.1 million. The revenue decrease was thus slightly more than made up for by lower raw material and energy prices and by higher sales quantities, particularly from the wheat starch plant in Pischelsdorf, Austria.

Especially in the Sugar segment, steadily declining market prices led to a significant drop in earnings. From October 2013 to October 2014 alone, the E.U. sugar price fell by about 30%, AGRANA said. The coming months will continue to be very challenging for Sugar. The Starch and Fruit segments have proved a stabilizing influence for profitability, with the Starch segment contributing a slight year-on-year increase in EBIT.

“Although no near-term trend reversal is currently in sight in the Sugar segment and we do not expect to match last year's earnings result this financial year, we do anticipate renewed rising margins in all segments in the medium term,” said AGRANA Chief Executive Officer Johann Marihart. “Especially during a time of difficult conditions for sugar producers, our Starch and Fruit segments are a source of stability for the Group's results. AGRANA thus remains committed to its strategy of diversification across three pillars and is taking measures to further strengthen them.”

Profit before tax decreased from €136.7 million in the prior year to €116.5 million. After an income tax expense of €31.9 million based on a tax rate of 27.4% (prior year: 21.7%), the Group’s profit for the period was €84.6 million (prior year: €107 million). Earnings per share were €5.70 (prior year: €7.40).

Despite a difficult market environment, AGRANA said it believes that its sound finances and its diversified business model with the three segments of Sugar, Starch and Fruit give the group a continuing solid footing for the new financial year.

“As it stands today, we expect group revenue to be steady in the 2015-16 financial year. Operating profit (EBIT) is likely to decrease significantly," Marihart said.

In 2015-16, the total investment in the three business segments, about €93 million, will remain slightly ahead of depreciation. For example, the Sugar segment is completing the molasses desugaring plant in Tulln and the new sugar packaging center in Kaposvár, Hungary. In the Starch segment, AGRANA is expanding capacity at the Aschach and Gmünd facilities (both in Austria).