Release Date: July 11, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- The Food segment performed better than expected, with a notable 25% increase in the fruit preparations business.
- Positive contracting results last winter indicate sufficient raw material availability for the upcoming beet campaign.
- Good crop forecasts in the European Union and favorable precipitation conditions suggest strong harvests for key agricultural raw materials like corn and wheat.
- Energy costs have decreased significantly, moving closer to pre-Ukrainian war levels.
- The company remains on track to achieve its sustainability targets and is implementing new European Union sustainability reporting standards.
Negative Points
- Revenue decreased by 2.3%, with significant declines in EBITDA and operating profit.
- The sugar segment is under pressure due to lower prices and increased competition from Ukrainian imports.
- The Starch segment experienced a significant decline in revenue and is facing margin pressure.
- The EBIT for the sugar segment was negative, primarily due to higher supply versus demand and pressure on world market prices.
- The company expects a significant decrease in EBIT for the full financial year, with a projected drop of around 50%.
Q & A Highlights
Q: Your guidance for the second quarter assumes that it will be half of the result last year. Could you elaborate on what should be the drivers of improvement in the second quarter versus the first quarter?
A: Improvement in the second quarter is mainly due to the lower performance in the second quarter last year. We expect a significant drop in EBIT for the full year, around minus 50%. For the first quarter, personnel costs were EUR106 million versus EUR98 million last year, and material expenses were EUR728 million versus EUR722 million last year.
Q: Could you elaborate on the year-on-year growth in material costs and personnel costs?
A: Personnel costs were EUR106 million in the first quarter '24/'25 compared to EUR98 million in the prior year. Material expenses were EUR728 million this year versus EUR722 million last year.
Q: Can you already observe any effect from the Ukrainian tariffs?
A: Currently, we do not see a significant positive effect due to the imports that came in until June '24. These volumes take time to be consumed.
Q: What is the status of your investments in the US food business?
A: We are in the trial phase with the customer, which will last another three to four months. We expect to start deliveries in the fourth quarter of the calendar year.
Q: What are your targets for working capital improvement?
A: Our target is to reduce working capital by around EUR75 million across all segments, assuming stable prices. We also expect further decreases due to a drop in raw material prices.
Q: What are the drivers for the expected deterioration in the second quarter compared to the first quarter?
A: The biggest effect comes from the fruit segment due to seasonal effects. Additionally, we expect a challenging quarter in the sugar segment.
Q: Could you provide more details on the financial outlook for the full year?
A: We expect a significant decrease in EBIT for the full year, around minus 50%. This is in line with our guidance and expectations.
Q: What are the key factors affecting the sugar segment's performance?
A: The sugar segment is impacted by higher supply versus demand, good harvest expectations, and pressure on world market prices.
Q: How are you addressing the challenges in the starch segment?
A: We are focusing on optimizing production and reducing costs to mitigate the margin pressure and lower sales prices in the starch segment.
Q: What are your sustainability targets and progress?
A: We remain on track to achieve our sustainability targets and will implement the corporate sustainability reporting directive and European sustainability reporting standards this financial year.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
