Annual Report 2001/02

Transcription

1 Annual Report 20/

2 AGRANA Beteiligungs-Aktiengesellschaft Key data 20/ 2000/ 1999/ / / / /96 Corporate data IAS IAS IAS IAS RLG RLG RLG Revenues mn Operating profit mn Profit before income tax mn Profit from ordinary activities mn Consolidated profit for the year mn Net cash from profit applying IAS mn applying RLG mn Investments mn Staff 4,463 4,753 5,290 4,506 2,555 2,812 3,004 EBIT margin % ROS % Equity ratio % Performance on the stock exchange High Low Close Earnings per share applying IAS applying HGB (ÖVFA) Dividend per share Dividend yield % P/E ratio (close) Stock-market capitalization (close) mn Balance-sheet data Share capital mn Non-current assets mn Equity mn Balance-sheet total mn

3 Annual Report of AGRANA Beteiligungs-Aktiengesellschaft for the financial year from 1 March 20 through 28 February 20

4 ( ) CATIONAMYL (cationic starch) for the paper industry. Our CATIONAMYL starches can be potato- or maize-based and are hot- or cold-water soluble. They act as filler and fibre retainers and increase paper strength.

5 AGRANA Beteiligungs-Aktiengesellschaft Highlights during the financial year Consolidated revenues grow by 11 per cent to 843 million. Operating profit increases by 14 per cent, and profit for the year grows by 18 per cent. We enlarge the maize starch factory in Aschach. The Austrian Starch and Sugar Divisions record improved results, and earnings from foreign interests grow. The EU sugar-market regime is extended to AGRANA purchases the S.C. A.G.F.D. Tandarei S.A. starch factory in Romania. The AGRANA share gains 65 per cent to during the 20/ financial year (and continues to rise to stand at on 10 May 20). Showing you the STARCH in us: The pictures in our recent annual reports mainly portrayed the sweeter side of the AGRANA Group. This time, we want to show you the STARCH in us. AGRANA supplies a wide range of starch products made from both potatoes and maize. They have a variety of uses in the Food sector (food and beverage industries, organic products, GM-free products) and the Non-Food sector (paper and paperconverting and corrugated cardboard industries, textile industry, construction chemicals industry and pharmaceutical and cosmetics industries). We encounter starches every day of our lives. To find out more about AGRANA s contribution to a richer world of starch, visit our website at 3

6 AGRANA Beteiligungs-Aktiengesellschaft Preface by the Chairman of the Board of Management Johann Marihart Dear Sir or Madam, The AGRANA Group recorded its highest revenues and profits to date in the 20/ financial year. Revenues grew by 11 per cent to million (previous year: million). The Austrian members of the Group generated two thirds of the increase of 82.6 million, and one third was accounted for by the members of AGRANA International. Within AGRANA Zucker und Stärke AG, the Sugar Division s revenues grew by 6.7 per cent and the Starch Division expanded by 12.7 per cent. The Starch Division s growth was above all due to the increase in capacities at our maize starch factory from mid-20. AGRANA s operating profit grew even more rapidly than revenues, increasing by 14 per cent, and consolidated profit for the year advanced by 18 per cent. Operating profit of 76 million (previous year: 67 million) increased our EBIT margin to 9.0 per cent (previous year: 8.8 per cent). Consolidated profit for the year came to 44.3 million, as against 37.6 million in 2000/. 4

7 AGRANA Beteiligungs-Aktiengesellschaft Walter Grausam Klaus Korn The development of profits was the fruit both of numerous long-term strategic initiatives and short-term measures undertaken to cope with an increasingly difficult economic environment. The business environment We are pleased to report that the EU sugar-market regime has been extended by five years to 2006, albeit it with reduced quotas and without the storage refund system. The strong US dollar and a fall of 2 million metric tons in the European Union s white sugar harvest, which totalled 15 million metric tons, have stabilized export prices. However, a record sugarcane harvest in Brazil in 20 has led to a drop in the world market price of sugar, and there are signs that the US dollar will weaken. The Western Balkans Agreement and the EBA initiative have already resulted in tariff-free imports to the EU, and they are increasing. However, accession negotiations between the EU and countries in Central and Eastern Europe are nearing completion, and they will have a sustained beneficial impact on our subsidiaries. 5

8 AGRANA Beteiligungs-Aktiengesellschaft AGRANA International The closure of the Acs sugar factory in Hungary during 20 was the latest major rationalization by Magyar Cukor. Results were very good both in Hungary and in the Czech Republic and Slovakia. Having launched Koronas Cukor in Hungary and Korunni Cukr in the Czech Republic, we also launched Korunny Cukor in Slovakia in December 20. The sugar market in Romania is still plagued by profound structural problems caused by the inadequacy of safeguard measures for the beet-growing sector. Our subsidiaries are also affected by those problems. We also launched a branded product in Romania, called Margaritar Zahar, during the year under review. We are implementing a policy of geographical specialization in our refining and beet processing operations. Our starch manufacturing operations gained a new geographical focus in Tandarei when we acquired the S.C.A.G.F.D.Tandarei S.A. maize starch factory. The sugar and isoglucose quotas offered to the Czech Republic, Hungary and Slovakia by the European Union are close to our expectations, and as a basis for negotiation, they have created a good medium-term outlook for the Eastern European strategy we launched in Austria Our activities in Austria account for 68 per cent of revenues and 59 per cent of operating profit. We are placed third in the structural ranking of the European Union s 14 sugar producing countries, processing 12,000 metric tons of beet a day in each of our three sugar factories and manufacturing 140,000 metric tons of sugar per factory and year. We are placed at least as well when it comes to the efficiency of our usage of energy and process materials. Our sugar factories have already achieved a 22 per cent cut in CO 2 emissions since 1990, far surpassing the standards agreed at Kyoto for the year 20 (cut of 13 per cent). The increase in the maize starch capacities of our Austrian Starch Division went smoothly on-line in mid-20. The doubling of our starch revenues to 130 million since Austria joined the EU has been the fruit of making risk investments that were perfectly matched to opportunities in the marketplace. In the next few years, we plan to spend another 60 million on enlarging processing capacities to 1,000 metric tons of maize a day and implementing new refining 6

9 AGRANA Beteiligungs-Aktiengesellschaft technologies such as saccharification, drum drying and extrusion at Gmünd and Aschach. We have been encouraged in our ambitious plans by the development of AGRANA s results in recent years. Moreover, we have been able to create numerous new skilled industrial jobs in the Starch Division. Outlook We are entering the new financial year in a spirit of optimism. The prospect of an enlarged European Union and the results of the WTO negotiations against the background of the clash of interests between EU and US agricultural policies will be the most important factors influencing our operating environment. We want to go on growing in both qualitative and quantitative terms, whether by giving greater depth to our refining operations for instance by extracting betaine from molasses or by continuing to invest in the starch sector. And we will be keeping an eye on possible acquisitions in the Balkans as well as continuing systematically to rationalize through the concentration and specialization of our manufacturing facilities. Our healthy profits and positive outlook for the current financial year are also reflected in our dividend proposal, which we are increasing to 1.30 per share (previous year: 1.09). To remain listed in the Prime Market segment on the Vienna stock exchange, we must decide to convert our preference shares into ordinary shares by not later than 31 December 20. I would like to end by thanking all those who do business with us, our shareholders and the supervisory bodies for the trust they have placed in our company and in its management. In addition, I would like to express my thanks to all our staff, whose dedication, skills and zeal have helped us to achieve our goals and our good results under challenging market conditions. That same dedication, motivation and zeal will remain crucial to the achievement of our corporate goals in the future. Yours faithfully, Johann MARIHART 7

10 AGRANA Beteiligungs-Aktiengesellschaft The company s boards and officers Supervisory Board Christian KONRAD, Vienna Chairman Rudolf MÜLLER, Ochsenfurt Vice-Chairman Ferdinand GASSAUER-FLEISSNER, Vienna Vice-Chairman Board of Management Johann MARIHART, Limberg Chairman Walter GRAUSAM, Vienna Klaus KORN, Ochsenfurt Hans-Jörg GEBHARD, Eppingen Erwin HAMESEDER, Mühldorf Christoph KIRSCH, Weinheim/Bergstrasse Richard SCHWAIGER, Aiterhofen Martin WEISS, Lassee Staff Council delegates: Ernst HERZIG, Breitenfurt Harald TOTH, Leopoldsdorf Peter VYMYSLICKY, Leopoldsdorf Erich WEISSENBÖCK, Gmünd 8

11 AGRANA Beteiligungs-Aktiengesellschaft The structure of the AGRANA Group AGRANA Beteiligungs-Aktiengesellschaft Österr. Rübensamenzucht Ges.m.b.H. (Austria) ÖSAT Beteiligungsges.m.b.H. (Austria) S.C. AGRANA Romania Holding and Trading Comp. s.r.l. (Romania) S.C. Zaharul S.A. Buzau (Romania) S.C. Danubiana Roman S.A. (Romania) AGRANA Zucker und Stärke AG S.C. BETA-Tandarei S.A. (Romania) S.C. A.G.F.D. Tandarei S.A. (Romania) Magyar Cukor Rt. (Hungary) Hungrana Kft. (Hungary) Moravskoslezské Cukrovary a.s. (Czech Republic) Slovenské Cukrovary a.s. (Slovakia) AGRANA Internationale Verwaltungs- und Asset- Management AG & Co KG Management and Coordination AGRANA Marketing- und Vertriebsservice Ges.m.b.H. INSTANTINA Ges.m.b.H. (Austria) Zuckerforschung Tulln Ges.m.b.H. (Austria) Hottlet Sugar Trading N.V. (Belgium) Portion Pack Europe Holding B.V. (Netherlands) 9

12 ( ) SOLAMYL (hot-water soluble potato starch) is used as a sizing agent for threads made of cotton, wool, linen or synthetic fibres.

13 AGRANA Beteiligungs-Aktiengesellschaft The AGRANA share The AGRANA share stood at at the beginning of the 20/ financial year. It reached a high of on 1 and 4 February 20 and a low of at the beginning of the financial year on 1 March 20. It stood at at the close of the financial year on 28 February 20, giving a full-year gain of 65.5 per cent. Subsequently, the AGRANA share was trading at on 10 May 20. The company s market capitalization totalled 44,200 thousand at the end of the financial year. Over the same period, the Austrian Traded Index (ATX) advanced by 1.25 per cent from 1, points (1 March 20) to 1, points. It stood at 1, points on 10 May 20. Since 1 January 20, the AGRANA share has been traded in the Prime Market segment on the Vienna stock exchange (subject to the conversion of its preference shares to ordinary shares by not later than 31 December 20. To be a part of that segment, issuers must observe stricter standards of transparency, quality and disclosure than those laid down in the provisions of the Austrian Börsegesetz (stock exchange act). AGRANA satisfies all the criteria but the require- ment regarding share type (i.e. only ordinary shares qualify for trading in this quality segment). Consequently, negotiations are currently underway with our ordinary shareholders regarding the conversion of our preference shares into ordinary shares by not later than 31 December 20. Besides being listed in the Prime Market segment on the Vienna stock exchange, the AGRANA share is also traded in the Präsenshandel segment on the Frankfurt stock exchange and has been listed on the Stuttgart stock exchange since the spring of The development of the AGRANA share and the ATX index AGRANA ATX 1 March 28 Feb 10 May Events, publications & dividends calendar for 20/03 (provisional) Publication of results for the 20/ financial year 13 June 20 General Meeting of Shareholders 12 July 20 Dividend ex-day and dividend pay-day 16 July 20 Publication of results for Q1 20/03 17 July 20 Publication of results for H1 20/03 11 October 20 Gewinn Fair October 20 Publication of results for Q1 Q3 20/03 16 January 2003 Disclosures and information AGRANA had a stand at the Gewinn Fair in Vienna in October 20. In addition, we provided information about the Group s business development on a regular up-to-the-minute basis in numerous press releases, at a press conference held to present the Annual Financial Statements in June 20, and during one-to-one meetings with the media. Outpayment to shareholders The Board of Management and the Supervisory Board will be recommending that the General Meeting of Shareholders on 12 July 20 approve an increased dividend payout to shareholders of 1.30 per share, as against 1.09 last year. 11

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15 Consolidated Group Report

16 Economic conditions AGRANA Beteiligungs-AG Economic conditions Conditions in general The fourth WTO Miniterial took place in Doha from 9 to 14 November 20. It agreed the agenda for a new round of negotiations. In the agricultural sector, it was decided to conduct negotiations with the following goals: substantial improvements in access to the market, reductions in all forms of export subsidies with the goal of their complete abolition (but without assuming any particular negotiating result) and substantial reductions in trade-distorting measures. The EU negotiators have rated the agreement for the agricultural sector as a success in that it only specifies that there should be negotiations about the agricultural sector but does not define a timeline or detail results. Among other things, the timetable for the future stipulates that the obligations of every WTO member are to be defined by the end of 2003 with the goal of implementing actual measures from mid Council Regulation No. 2563/2000 issued by the Council of Europe on 20 November 2000 extended the Western Balkans Agreement (Council Regulation No. 2007/ 2000) which gives agricultural products from the Western Balkans (Albania, Croatia, Bosnia and Herzegovina, Kosovo) unhindered access to the Single Market with the exception of fishery products, baby-beef and wine to include Macedonia and Yugoslavia. The agreement will expire on 31 December The Commission will be able to take action within the scope of a safeguard clause if imports of agricultural products or fishery products cause serious problems in the European marketplace. On 26 February 20, the EU foreign ministers approved Council Regulation No. 2820/98, which gives the world s 48 least developed countries (LDCs) tariff-free access to the European Single Market for everything but arms (EBA). Transitional measures lasting up to and including 2009 have been laid down for sugar, rice and bananas, which have been classified as sensitive products. The import quota for sugar has been set at 74,000 metric tons per annum (increasing by 15 per cent annually). Customs duties for the 48 countries concerned will gradually be reduced from 2006, culminating in complete deregulation as of

17 Economic conditions AGRANA Beteiligungs-AG The world sugar market World sugar production from sugar beet and sugar cane during the 20/ sugar marketing year (SMY), running from September to August, came to an estimated 136 million metric tons (raw value), as against approximately 131 million metric tons the year before. Global consumption (raw value) is expected to increase slightly to million metric tons (previous year: million metric tons) in the 20/ SMY. Allowing for global imports and exports, stocks ended the year at about 63 million metric tons (previous year: 61.7 million metric tons), or 47.8 per cent of consumption (previous year: 47.4 per cent). During the 20/ financial year, the average world market price of white sugar (as quoted in London) rose from US$ 235 (February 20) to a monthly average high of US$ 279 in June 20 and then stood at US$ 238 in February 20. Meanwhile the middle rate of exchange of the US dollar rose from 1.07 on 1 March 20 to 1.14 on 28 February 20. The sugar market in Austria and the rest of Europe Areas under beet in the European Union fell from million hectares in 2000 to million hectares in 20, and sugar production from beet within the EU fell from 18.2 million metric tons to 15.8 million metric tons. Export availability, inclusive of C sugar, fell from 6 million metric tons in 2000 to 3.7 million metric tons in the year under review. On 22 May 20, the EU agricultural ministers agreed to extend the sugar-market regime. The members of the European Union unanimously accepted a compromise proposed during the Swedish Presidency, under which the sugar-market regime has been extended by five years to 30 June 2006 subject to revision at the beginning of The EU Commission won acceptance for its proposal that the storage refund system should be abolished and that a permanent cut in quotas of 115,000 metric tons should be carried out. The reduction in sugar quotas to million metric tons carried out in the course of the reform of the sugar-market regime 15

18 Economic conditions AGRANA Beteiligungs-AG translated into a 0.75 per cent cut from the previous total of million metric tons. The Austrian quota fell from 390,410 metric tons to 387,326 metric tons (314,9 metric tons of A sugar and 73,297 metric tons of B sugar) as a result. An intertrade agreement for beet growing from 20 through 2005 was concluded with Austria s beet farmers in September 20. In November 20, a decision was reached regarding exports by overseas countries and territories into the European Union. It provides for an annual quota of 28,000 metric tons of tariff-free imports of sugar and sugared products to the EU in the period from 20 to That quota is then to be cut by 7,000 metric tons a year from 2008 to 20. The tariff-free quota will be abolished altogether as of 1 January 21. Within that quota, sugar and sugared products are exempted from tariffs. The starch market in Austria and the rest of Europe Potatoes AGRANA has reduced the organizational levy payable by farmers during the 20 harvest year by another 0.75 to 1.45 per metric ton. Because balancing payments will be unchanged despite the reduction in the organizational levy, the price paid for potatoes during the 20 harvest year will be slightly up on 20 at per metric ton. Maize Maize deliveries in 20 totalled approximately 241,000 metric tons. We processed some 47,000 metric tons of wet maize between 17 September and 20 November 20. The European Union s eastward enlargement The Commission s negotiating proposals in preparation for enlargement are based on the assumption that up to 10 new member-states will be admitted from In the agricultural sector, the proposals provide for the introduction of direct payments to farmers (starting with 25 per cent of the premium rates currently paid in the EU) followed by gradual adjustments within a transitional period of 10 years ( ) in addition to the laying down of production quotas for sugar, isoglucose and potato starch. 16

19 Economic conditions AGRANA Beteiligungs-AG The table below shows the sugar, isoglucose and potato starch quotas applied for by the Central and Eastern European countries and the counterproposals made by the European Commission: Sugar quotas Isoglucose quotas Potato starch quotas Commis- Commis- Metric tons Requested Commission proposal Requested sion Requested sion Total A sugar B sugar proposal proposal Czech Rep. 505, , ,409 3,828 None 45,000 16,967 Hungary 480, ,1 378,791 1, , ,244 None Slovakia 235, , ,760 18,976 60,000 3,220 None Estonia 75,000 None 10, Latvia 110,000 52,482 47,711 4,771 None 15,000 3,447 Lithuania 165,000 96,241 96,241 None 8, Malta None None None Poland 1,866,000 1,665,7 1,590,533 74,484 20,000 2, ,000 90,546 Slovenia 75,000 52,977 48,161 4,816 None 2,800 Cyprus None None None The sugar production quotas proposed by the Commission would result in white sugar production of 2.9 million metric tons in the year after the accessions of the new members. Poland would have the largest quota of 1.67 million metric tons within that total. During the second round of liberalization of agricultural trade with Central and Eastern Europe, the EU Commission also plans to bring sensitive products such as cereals, dairy products and beef into the process on the basis of a double-zero approach. The double-zero approach involves bilateral liberalization within the scope of which the tariff-free movement of products is allowed within the limits of a quota, but no export refunds are paid for them. The import quotas for sensitive products have been set at 2 per cent of domestic consumption subject to an annual increase to enhance trade volumes. Sugar and rice are to remain excluded from the negotiations. 17

20 Financial condition and profit position AGRANA Beteiligungs-AG Financial condition and profit position Reporting in accordance with IAS The Consolidated Financial Statements for the 20/ financial year were drawn up in accordance with the International Accounting Standards (IAS). We have reported in euros ( ), thousands of euros and millions of euros. Central and Eastern Europe 41.4% [48.0%] Breakdown of operating result in 20/ [2000/] Austria 58.6% [52.0%] Profit position Consolidated revenues grew by 10.9 per cent to million (previous year: million). The increase was due to rising revenues recorded by both the Austrian Sugar and Starch Divisions and the Group s foreign subsidiaries and to changes in the Consolidated Group. The new additions to the Consolidated Group were RUMA Handelsgesellschaft m.b.h., Hagenbrunn, Austria, and Romanian starch factory S.C. A.G.F.D. Tandarei S.A. The scope of the Consolidated Group was reduced by the liquidation of Kaposvari Cukor Menedzsment Kft., Budapest. The merger of two Slovakian companies Cukrovar Nova a.s., Sered, and Gemercukor a.s., Rimavská Sobota resulted in the addition of Slovenské Cukrovary a.s., Rimavská Sobota, Slovakia, to the Consolidated Group. The two merged companies were excluded. Sixty-nine per cent of the increase in revenues of 82.6 million was generated by the Austrian Group-members, including above all the Sugar Division (6.7 per cent growth in revenues), the Starch Divisions (12.7 per cent growth in revenues) and trading activities. Central and Eastern Europe accounted for 32 per cent of aggregate revenues. Operating profit advanced by 13.9 per cent from 66.7 million to 76.0 million, and profit for the year advanced by 17.8 per cent. Central and Eastern Europe accounted for 41.4 per cent of consolidated operating profit. 18

21 Financial condition and profit position AGRANA Beteiligungs-AG Development of the Balance Sheet ( mn) Assets Equity and liabilities Non-current assets Equity Current assets Minorities Provisions Payables of which liquidity [97.1] [103.3] Deferred items Deferred items / 00/ / 00/ Revenues by region in 20/ [2000/] Revenues by country in 20/ [2000/] Central and Eastern Europe 35% [33%] Other foreign 2% [2%] Romania 6% [8%] Czech Republic 6% [6%] Hungary 17% [15%] Slovakia 3% [3%] Other EU 6% [7%] Germany 10% [8%] Austria 47% [50%] Austria 68% [68%] 19

22 Report on the Group s principal subsidiaries AGRANA Beteiligungs-AG AGRANA Zucker und Stärke Aktiengesellschaft SUGAR DIVISION Course of business The division s business development during the financial year under review was dominated by increases in the quantity and value of sales of quota sugar, which increased to 381,000 metric tons (previous year: 359,000 metric tons). Sugar sales totalled 444,000 metric tons during the 20/ financial year (previous financial year: 464,900 metric tons). Sugar revenues for the purposes of IAS came to million (previous year: million). Production AGRANA concluded beet-growing contracts with 10,300 Austrian farmers for an area of 44,700 hectares (previous year: 43,000 hectares) for the 20 campaign. The per-hectare beet yield of 62 metric tons (previous year: 61.5 metric tons) was in line with long-term averages. Growing conditions were ideal until the end of July, but a dry August slowed the beet s rapid development somewhat. Nonetheless, ample precipitation in September boosted the crop s development substantially towards the end of the growing period. During the 20 beet campaign, 2,773,478 metric tons of beet (previous year: 2,633,532 metric tons) with an average sugar content of per cent (previous year: per cent) were processed into 423,400 metric tons of sugar (previous year: 411,200 metric tons). That was per cent of our maximum EU production quota of 387,326 metric tons. The bigger beet crop lengthened the campaign to 77 days, although that was only slightly longer than the previous year s 74-day campaign because our three sugar factories stepped up their daily throughput by another 457 metric tons to 36,2 metric tons. That was mainly possible because of a nearly glitch-free campaign, the beet s lower sugar content and a raft of detailed optimizations. AGRANA is in the top third of the European rankings of factory sizes. In terms of average daily processing throughput per sugar factory, Austria ranks third behind the Netherlands and Sweden and ahead of France with throughput of 12,000 metric tons a day. Earth adhering to the beet was virtually unchanged at 9.0 per cent (previous year: 8.8 per cent). Markets AGRANA Marketing- und Vertriebsservice Ges.m.b.H. (AMV) has responsibility for product development, marketing, brand cultivation, sales, distribution and cus- tomer services on behalf of the entire Sugar Division. We will be reporting on those activities in the section of this report dealing with AGRANA Marketingund Vertriebsservice Ges.m.b.H., commencing page 24. Investments Investments in the three sugar factories in Austria totalled 5.9 million during 20. The primary focuses were beet deliveries, limekilns, juice purification, white sugar centrifuges, process control systems and crystallization. In addition to increasing capacities, our investments also led to further cuts in energy costs and reductions in our consumption of process materials and supplies. Since 1990, the Sugar Division s aggregate energy consumption in relation to quantities of beet processed has gone down by more than 27 per cent, and specific CO 2 emissions have fallen by more than 30 per cent over the same period. As a result, Austria s sugar industry has not only made an important contribution to reducing burdens on the environment. It has also gone much further than the target agreed in Kyoto, which is to reduce nationwide CO 2 emissions by 13 per cent between 1990 and

23 ( ) MAISITA (native maize starch) is used by food processors as an ingredient in dessert powders, cakes, pastries and crèmes.

24 Report on the Group s principal subsidiaries AGRANA Beteiligungs-AG STARCH DIVISION Course of business The division s performance continued to improve during the 20/ financial year. Sales revenues again increased, growing by another 12.7 per cent to million (previous year: million). That was above all achieved by upgrading the product-mix in the direction of higher-quality products that attract better prices and increasing basic production volumes by enlarging capacities in Aschach. Operating profit in the 20/ financial year underwent a sustainable improvement that was largely attributable to increased capacities at the Aschach maize starch factory, cost optimizations and the opening up of new markets and market niches. Production AGRANA accepted delivery of a total of 213,000 metric tons (previous year: 228,600 metric tons) of starch potatoes from 2,272 farmers (previous year: 2,345 farmers) for processing during the 20 campaign, which lasted 123 days. Potato starch production came to slightly less than our EU quota of 47,691 metric tons. We increased daily processing throughput to 1,742 metric tons (previous year: 1,720 metric tons) of potatoes. The pota- toes had a starch content of 17.4 per cent (previous year: 17.9 per cent). We concluded contracts with 2,1 farmers for 213,500 metric tons of starch potatoes for the 20 harvest year (previous year: 222,800 metric tons). Four hundred and forty-four growers delivered a total of 16,500 metric tons (previous year: 17,150 metric tons) of potatoes for the food industry and organic potatoes for making long-life potato products (e.g. mashed potato) and organic foods. We concluded contracts for 17,800 metric tons of potatoes for the food industry and organic potatoes for the 20 harvest year (previous year: 15,300 metric tons). The Aschach maize starch factory processed 240,000 metric tons of maize during the 20/ financial year (previous year: 212,000 metric tons). The increase in processed volumes was due to the successful increase in capacities at our maize starch factory in mid-20. Following good harvests from 1998 to 20, areas under maize are likely to fall slightly in 20. However, if yields are good, our raw materials basis should remain assured. Our Markets Despite the economy s poor development, sales of starch and starch prod- ucts were 9 per cent up on the year. The enlargement of maize processing capacities at Aschach led to a disproportionately large increase in sales of by-products, which rose by 22 per cent. NON-FOOD Technical Starches The NON-FOOD Technical Starches segment still accounted for 22 per cent of total starch sales, notwithstanding a partial shift in the pattern of sales of technical starches in favour of sales to the food and beverage industries. Domestic sales by volume to the paper industry during the 20/ financial year were up 46 per cent, and total sales inclusive of exports increased by 25 per cent. Because of the increase in the proportion of native starch, sales by value in that segment did not grow as rapidly. Total sales to the corrugated cardboard Total revenues ( mn) 54% % % % / 99 99/ 00 00/ / 22 Total revenues Export ratio

25 Report on the Group s principal subsidiaries AGRANA Beteiligungs-AG industry grew by about 9 per cent, and prices in that segment also rose. Sales to the textile industry were again more than 10 per cent up on the year in both volume and value terms. Sales to the construction industry grew by 17 per cent, and revenues in that area increased disproportionately rapidly, advancing by 25 per cent, thanks to further shifts into higher-priced lines. FOOD starches for the food and beverage industries FOOD is the Starch Division s largest segment. Sales by volume increased by 6.5 per cent on the year. Capacities in the long-life potato products sub-segment were thoroughly utilized through the production of both conventional mashed potato flakes and organic flakes. Volumes increased by more than 4 per cent. Organic products For more than 10 years, AGRANA has been processing organically grown potato and maize into organic potato and maize starches, organic saccharification products and organic potato products (potato flakes and dried potatoes) at the Gmünd and Aschach factories. Those products are sold throughout the food and beverage industries for use above all in prod- ucts such as fruit preparations, confectionery, baby foods, cakes and pastries, delicatessen products, and many more. In addition, AGRANA also makes household products such as mashed potato and dumpling mixes for major European manufacturers of branded products. More than 90 per cent of those organic ingredients were exported. Our biggest markets are the European Union, Switzerland, North America, Southeast Asia and Oceania. The Gmünd and Aschach factories are certified organic producers within the meaning of the current amendment of EU Council Regulation 2092/91. In recent years, both sales and revenues in the organic segment have been growing by about 50 per cent a year. GM-free maize starch products AGRANA has been manufacturing certified GM-free maize-based and waxy maize-based food ingredients since Certification encompasses the entire production process, from the selection of seed, planting and harvesting to processing at Aschach and Gmünd. Certification is carried out in accordance with the Austrian Codex, Germany s Verordnung zur Änderung der Neuartige Lebensmittel- und Lebensmittelzutaten-Verordnung and the Swiss Lebensmittelverordnung. The product line includes native starches, pregelatinized starches, maltodextrine and dried glucose syrups for use in blancmanges, soups and sauces, dairy foods for infants and baby food in jars, spice mixtures, and fruit and vegetable powders. AGRANA is one of Europe s biggest B2B supplier of both organic and GM-free products. GROUP INTERESTS We will report on the interests held by AGRANA Zucker und Stärke AG in Central and Eastern Europe whose managements and coordination are the responsibility of AGRANA Internationale Verwaltungs- und Asset-Management AG & Co KG from page

26 Report on the Group s principal subsidiaries AGRANA Beteiligungs-AG AGRANA Marketing- und Vertriebsservice Ges.m.b.H. AGRANA Marketing- und Vertriebsservice Ges.m.b.H. (AMV) sells AGRANA s products to the food trade (branded products) and the food and beverage and animal feed industries as well as being responsible for marketing the entire product line of AGRANA Zucker und Stärke AG. AMV also has responsibility for brand management and the distribution and sale of products made by Erste Wiener Walzmühle Vonwiller Ges.m.b.H. and FARINA Mühlen Ges.m.b.H., in addition to which it handles sales of the catering products of Hellma Lebensmittel-Verpackungs-Ges.m.b.H. (a part of Portion Pack Europe). Course of business AMV recorded revenues of 456 million during the 20/ financial year (previous year: 414 million). Successful branded products Wiener Zucker The emphases of our marketing campaign during the 20/ financial year were Baking before Easter and Christmas, Mother s Day, Preserving and Sweetening with brown sugar varieties. We brought our Wiener Dessertbuch (Viennese deserts book) onto the market in April 20. Like our Viennese baking book and Viennese preserving book, it was very well received by customers. In the packaging field, we completely relaunched Wiener granulated sugar in jars and Wiener sugar candy (white and brown). Wiener Zucker is AGRANA s biggest-selling flagship brand in the domestic food market. Household sugar sales during the financial year under review totalled 70,000 metric tons, which was slightly up on the previous year s figure of 69,400 metric tons. Above all, good fruit har- Total sugar sales (metric tons) 498, , ,000 99/ 00 00/ / 24

27 Report on the Group s principal subsidiaries AGRANA Beteiligungs-AG vests increased sales of preserving sugar by 11.5 per cent. Sales of special sugar varieties increased by 8.3 per cent. Fini s Feinstes, Küchenperle, Farina During the year under review, marketing of our Fini s Feinstes, Küchenperle and Farina flour products continued to centre on the systematic cultivation of those brands in the consumer segment. We positioned them as follows: Fini s Feinstes Austria s leading national flour brand; Küchenperle a traditional regional brand in Upper Austria; Farina a supra-regional flour brand for the provinces of Styria, Carinthia, Vienna, Lower Austria and Burgenland. Those marketing activities focused mainly on the printed media. We launched Fini s Feinstes batter secret the delicious crispy crust as an innovative product for the convenienceorientated consumer. Sugar for the food and beverage industries Having consolidated and stabilized, the Austrian food and beverage industries continued to strengthen their positions in Central and Eastern Europe. Austrian members of the fruit preparations and soft drinks industries developed particularly well both within the EU and in the world market. Sales to the Austrian food and beverage sector grew from 216,800 metric tons in 2000/ to 220,400 metric tons in the financial year under review. Sales by volume to manufacturers of soft drinks increased by 4.6 per cent, but the closure of an Austrian factory by a multinational customer dented sales to the confectionery industry, and the decline could not be wholly offset by the success of our other customers in the confectionery industry. Sales of sugar to other sections of the food industry (fruit preparations, etc.) rose by nearly 3 per cent. Volumes of sugar substitution by imported sweetened fruit-juice concentrates, which attract lower customs duties, remained very high. of which Domestic sugar sales (metric tons) Quota sugar exports (metric tons) C sugar exports (metric tons) 349, , ,900 19,300 87,000 61,950 61,900 56, ,100 99/ 00 00/ / 99/ 00 00/ / 99/ 00 00/ / 25

28 ( ) ANM (sterilizable starch) is used by the cosmetics industry to make baby, body and foot powders, rouges, eye shadows and compact powders.

29 Report on the Group s principal subsidiaries AGRANA Beteiligungs-AG Sugar for the fermentation, chemical and other industries The abolition of the storage levy, taking it out of calculations of production refunds ( 20 per metric ton) made sugar slightly less attractive to the fermentation industry than starch hydrolysate. Nonetheless, we were able to sell 11,000 metric tons (previous year: 28,000 metric tons) in that segment. There is currently a shortage of beet molasses in the European marketplace, keeping prices high. Volumes and prices of both maize concentrates and maize gluten were also higher than in 2000/. Thanks to the growing needs of manufacturers of organic products, demand for potato protein was brisk. Both quantities and prices were up on the year. Starches for the food and beverage industries Sales of starch to the Austrian food and beverage industries are handled by AMV. Sales by volume increased by 6.5 per cent. Sales of third-party products Sales of merchandise purchased from other manufacturers came to 465,000 metric tons. This line includes protein feed, bee food, fondant and invert sugar syrup. By-products Because animal feed was in relatively short supply during 20/, dried pulp sold very well both at home and abroad. Prices stood at the same relatively normal levels as the year before. 27

30 Report on the Group s principal subsidiaries AGRANA Beteiligungs-AG AGRANA Internationale Verwaltungsund Asset-Management AG & Co KG AGRANA Internationale Verwaltungs- und Asset-Management AG & Co KG manages the operations of all the foreign subsidiaries of AGRANA Zucker und Stärke AG. AGRANA aims to expand its core business operations in the sugar and starch segments by acquiring interests in Central and Eastern Europe, and it plans to become a major player in the countries neighbouring Austria that will be a part of the European Union s eastward enlargement. Within those countries, AGRANA s primary focus will be on exploiting opportunities to apply its production and marketing expertise in its principal business segments sugar and starch and on developing those segments to ensure its competitiveness within the European Union. AGRANA s plans are based not just on transfers of cutting-edge technology but also on the application of the Group s wide-ranging know-how in the manufacturing, management, marketing, distribution, sales and raw materials fields. 28

31 Report on the Group s principal subsidiaries AGRANA Beteiligungs-AG Sugar and starch in Hungary Prevailing conditions in the Hungarian sugar market Sales in the Hungarian sugar market continued to fall in 20, dropping to 318,000 metric tons (previous year: 336,000 metric tons). 15,000 metric tons of sugar were imported and 8,000 metric tons exported. Import duties were increased in 20 to protect Hungary s national industries and agricultural sector. Growing quantities of artificial sweeteners are being used in the manufacture of cheap soft drinks in Hungary. We intend to combat that trend with the help of a public awareness campaign. Negotiations for an intertrade agreement between beet farmers and the sugar industry were concluded in May 20. Subsidiaries in Hungary Sales by Hungrana Kft. a processor of maize into starch and isoglucose grew to Ft 30 billion ( 116 million) during the 20 financial year. Magyar Cukor Rt. closed the 20 financial year with net revenues of Ft 19.8 billion ( 77 million), which was nearly 10 per cent more than in Its three sugar factories (Acs, Kaposvar and Petöhaza) processed 977,000 metric tons of sugar beet into 126,700 metric tons of white sugar in 20. The sugar factory in Acs was closed after the end of the 20 campaign. Contracts were concluded with farmers for 980,000 metric tons of beet in

32 Report on the Group s principal subsidiaries AGRANA Beteiligungs-AG Sugar in the Czech Republic Prevailing conditions in the Czech sugar market The year under review was dominated by uncertainty as to the conditions that will prevail in the future. The sugar-market regime introduced in 2000 was abrogated at the end of February 20 following a ruling by the constitutional court, and a new version complying with Czech constitutional law entered into force on 1 August 20. The new regime provides for a substantially reduced domestic quota of 356,000 metric tons and the imposition of an increased export requirement of 148,000 metric tons on the Czech sugar industry. However, safeguard measures and the internal monitoring of quotas are both necessary tools for the proper functioning of a market regime along EU lines, and they are still lacking. The absence of safeguards increased imports into the country, with the result that the Czech sugar industry only managed to sell 298,000 metric tons of sugar within the Czech Republic. Thanks to the minimum price which is decided by the ministry of finance rather than being directly linked to the sugar-market regime sugar prices paid to Czech manufacturers were stable. Against that background, Moravskoslezské Cukrovary a.s. achieved a market share of 21 per cent in the Czech Republic, selling 62,500 metric tons of white sugar in the domestic marketplace. Subsidiaries in the Czech Republic The net revenues of Moravskoslezské Cukrovary a.s. as defined by Czech financial reporting law increased by 6 per cent during the 20 financial/calendar year to total Kč 1,707 million ( 50 million). The sugar factories in Hrusovany and Opava processed 636,000 metric tons of beet into 91,000 metric tons of sugar during the 20 campaign. 30

33 Report on the Group s principal subsidiaries AGRANA Beteiligungs-AG Sugar in Slovakia Prevailing conditions in the Slovakian sugar market The Slovakian sugar market has a total annual volume of roughly 180,000 metric tons. A dramatic drop in sales to about 123,000 metric tons overshadowed the market during the 20 financial/calendar year. It was mainly due to imports from neighbouring countries, sales of sugar from government reserves (the mandatory crisis stockpile) and a significant increase of about 50 per cent in quantities processed within the scope of an inward processing regime, which totalled some 65,000 metric tons. However, the introduction of safeguards from mid-20 made it possible to stabilize the situation. Slovenské Cukrovary a.s. had a market share of roughly 28 per cent. The draft of a sugar-market regime along EU lines is still under negotiation. The sugar factories are currently working intensively on improving their control of inward processing. Subsidiaries in Slovakia As measured by Slovakian financial reporting law, Slovenské Cukrovary a.s. recorded net sales of Sk 940 million (nearly 22 million). Our two sugar factories in Slovakia, located in Sered and Rimavská Sobota, processed 381,700 metric tons of beet into 50,600 metric tons of sugar during the 20 campaign. 31

34 Report on the Group s principal subsidiaries AGRANA Beteiligungs-AG Sugar in Romania Prevailing conditions in the Romanian sugar market Romania s domestic sugar market had a volume of 456,000 metric tons in 20 (previous year: roughly 500,000 metric tons). In the absence of effective safeguard measures, more than 90 per cent of the annual demand for sugar in Romania is still being met by unrefined sugar imported from Brazil, Cuba and a number of other countries and refined into white sugar within Romania. In addition, Romania imported 50,000 metric tons of white sugar in 20, and the same amount is likely to be imported in 20. On 1 March 20, a 30 per cent tariff was imposed on imports of unrefined sugar into Romania, which had previously been exempted from duty. Subsidiaries in Romania On the applicable balance-sheet date of 31 December 20 (effectively 28 February 20), AGRANA Zucker und Stärke AG held the following interests in Romania: S.C. Zaharul S.A. Buzau 82% S.C. BETA-Tandarei S.A. 86% S.C. Danubiana Roman S.A. 90% S.C. A.G.F.D. Tandarei S.A. 100% The sugar factory in Roman extracted 11,400 metric tons of sugar from 128,800 metric tons of beet during Romania s 20 campaign, and the Buzau, Tandarei and Roman factories made some 131,000 metric tons of white sugar from imported unrefined sugar during the 20 financial year, giving total sugar production by AGRANA s Romanian sugar factories of 142,400 metric tons. S.C. AGRANA Romania Holding and Trading Company s.r.l., based in Bucharest, acts both as the holding company for the Group s three sugar factory subsidiaries and as AGRANA s marketing and sales company in the Romanian marketplace. Sales by the Buzau sugar factory totalled ROL 686 billion ( 26 million), Tandarei recorded revenues of ROL 396 billion ( 15 million), and the Roman sugar factory s revenues totalled ROL 540 billion ( 21 million) (applying Romanian accounting standards in each case). We acquired the S.C. A.G.F.D. Tandarei S.A. maize starch factory on 21 November

35 ( ) AMITROLIT (starch ether) enhances the adhesiveness of tile adhesives, fillers and wall mortar.

36 The environment AGRANA Beteiligungs-AG The environment AGRANA spent roughly 171 million on tion have fallen by 30 per cent. The environmental protection in Austria be- Austrian sugar industry has therefore tween 1988 and 20. That was rough- not only played a significant part in ly half of the total investment outlay protecting the environment but also of the Group s sugar and starch divi- long since gone achieved and surpassed sions. The principal emphases were the goals laid down at Kyoto (namely energy and water management. to reduce CO 2 emissions in Austria by The success of AGRANA s efforts to pro- 13 per cent between 1990 and 20). tect the environment is amply illustrat- Roughly half of the beet delivered to ed by the sugar factories energy usage. the sugar factories in Hohenau, Leopolds- The processing heat and electrical dorf and Tulln arrives by rail, and about energy needed to process the sugar beet one third of the potatoes processed by (beet has a water content of about 75 per the starch factory in Gmünd are deliv- Kyoto goals: Planned emission reductions under the Kyoto protocol on a 1999 basis cent) is created by combined heat and power generating plants (steam and gas turbines). The highly efficient use of energy resources reduced our consumption of fossil fuels and, consequently, ered by rail. Hygiene is essential when manufacturing foodstuffs. AGRANA Zucker und Stärke AG applies a HACCP concept (hazard analysis and critical control points) that AGRANA Zucker Austria EU gesamt (8%) cut specific emissions. Thanks to our investment outlay on cutting energy consumption, our specific energy usage has fallen by over 27 per cent since Over the same period, CO 2 emissions in is constantly updated in line with the latest research. AGRANA uses natural hop extracts for disinfecting purposes. The technique was developed by research subsidiary relation to campaign energy consump- Zuckerforschung Tulln Ges.m.b.H. Inter- (22%) 1 (13%) In relation to total annual energy consumption 34

37 The environment AGRANA Beteiligungs-AG national patents have been awarded. Natural gas has been AGRANA s sole source of primary energy since Closed circuits and the biological sewage clarification systems installed at all our sugar and starch factories in Austria have optimized the management of water resources. Processing and treating the earth stuck to the beet when it arrives at the factory is of great ecological importance. The installation of so-called soil cassettes with a period of storage of three year has made it possible to drain and stabilize the earth and return it to the field. Both the sugar factories and the potato starch factory in Gmünd sell the byproducts of their manufacturing processes so-called Carbokalk and potato run-off as high-grade soil enhancers. We have greatly improved the sound insulation and filter systems at all our factories during the past few years to control noise and dust pollution. Extensive measures were taken to reduce dust, odour and noise pollution during the final stage of development at the Aschach maize starch factory. In addition, a modern biological filter system for removing organic odoriphores now cleans exhaust flows from the by-product lines. We offer beet and potato growers comprehensive commercial and ecological advice. Soil analyses using electro-ultrafiltration (EUF) enable us to develop precise fertilization recommendations, in turn making sure that each plant only gets exactly what it needs to grow in addition to the nutrients already available in the soil without over-fertilizing the land or dirtying the ground water below. The gypsum absorber block method for measuring moisture in the soil near the root of the plant guarantees that beet fields are irrigated at exactly the right time. 35