INTERIM REPORT FINANCIAL YEAR 2018/19 3 MONTHS / 1 MARCH TO 31 MAY 2017

Transcription

1 INTERIM REPORT FINANCIAL YEAR 2018/19 3 MONTHS / 1 MARCH TO 31 MAY 2017

2 2 INTERIM REPORT KEY FIGURES THREE MONTHS 2018/2019 HIGHLIGHTS OF THE FIRST THREE MONTHS 2018/2019 THE SUGAR MARKET KEY FIGURES THREE MONTHS 2018/2019 EARNINGS AND RETURNS 1/3/ /5/2018 1/3/ /5/2017 Change Revenues EUR m EBITDA EUR m EBITDA margin 1 % EBIT EUR m EBIT margin 2 % Consolidated net income before minority interests EUR m Return on sales 3 % RoCE 4 % Return on equity 5 % EBITDA / revenues 2 EBIT / revenues 3 Consolidated net income (after minority interests) / revenues 4 EBIT / average capital employed 5 Consolidated net income (after minority interests) / equity CASH FLOW AND INVESTMENTS 1/3/ /5/2018 1/3/ /5/2017 Change Cash flow from operating activities EUR m Cash flow from investing activities EUR m Free cash flow 1 EUR m Investment in property, plant and equipment and intangible assets EUR m Cash flow from operating activities + cash flow from investing activities BALANCE SHEET FIGURES 31/5/ /5/2017 Change Total assets EUR m 2,023 2, Shareholders equity EUR m 1,429 1, Equity ratio % Debt capital EUR m Capital employed EUR m 1,531 1, Financial liabilities EUR m Cash and cash equivalents EUR m Net debt ( )/ Investment (+) 1 EUR m Cash and cash equivalents financial liabilities THE SUGAR MARKET EU PRICES AND WORLD MARKET PRICES FOR SUGAR, Euro /t 296 /t EU market price Euro/t Global market price Euro/t Source: EU-Price-Reporting, 28 June 2018 and for the world market, London No. 5 INTERIM REPORT 3 MONTHS 2018/19

3 3 CONTENTS 4 LETTER FROM THE EXECUTIVE BOARD 6 SITES IN EUROPE 7 EARNINGS AND FINANCIAL POSITION AND NET ASSETS 9 EVENTS AFTER THE BALANCE SHEET DATE 9 OUTLOOK 10 CONSOLIDATED INCOME STATEMENT 10 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME 11 CONSOLIDATED CASH FLOW STATEMENT 12 CONSOLIDATED BALANCE SHEET 14 CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS EQUITY 15 FINANCIAL CALENDAR / ONLINE PUBLICATIONS HIGHLIGHTS OF THE FIRST THREE MONTHS 2018/2019 REVENUES AND NET INCOME FALL SHARPLY In the first three months of the 2018/2019 financial year, Nordzucker generated revenues of EUR million. This was EUR 75.1 million lower than in the same period of the previous year. The fall in revenues was mainly due to the lower sales prices for sugar. Profit for the period amounted to EUR 3.4 million (comparative period: EUR 41.5 million). AVERAGE HARVEST EXPECTED Although sowing was slightly delayed in 2018 compared with the same period of the previous year, the warm weather after sowing led to the rows closing early. The beets have not suffered from the heat and dry conditions in May and June so far, but their development is dependent on the amount of rainfall in the coming weeks. We currently expect an average harvest. EU SUGAR PRICES FOLLOW WORLD MARKET TREND With the end of the quota system, sugar prices have fallen significantly in the EU. According to the EU s price reports, the sugar price stood at EUR 362 per tonne in April a drop of more than EUR 120 per tonne since October The world market price (London No. 5) was considerably below this figure at EUR 296 per tonne in June, taking the price to a level last seen in INTERIM REPORT 3 MONTHS 2018/19

4 4 INTERIM REPORT LETTER FROM THE EXECUTIVE BOARD We mourn the death of our Chairman of the Supervisory Board, Hans-Christian Koehler We are sad to report that he passed away suddenly and unexpectedly on 4 July 2018, at the age of 62. With the passing of Hans Christian Koehler, we have lost a Chairman of the Super visory Board who was talented and generous in equal measure. Starting in 1997, he acted as a representative and ambassador for the north German sugar industry. While working for the public sugar company Uelzen Braunschweig, he played a central role in the founding of and the merger to form Nordzucker Holding AG. He was a member of the Supervisory Board since the founding of and was appointed its Chairman in He distinguished himself with his passion for Nordzucker, his close ties to farmers and employees of the company, his extensive expertise and his willingness to assume responsibility. We have lost a figure who significantly influenced and shaped the development of our company. We would like to express our deepest condolences to his family, who were his utmost priority and his rock. We are grateful for our time with him and will hold onto his memory. Supervisory Board, Executive Board and employees INTERIM REPORT 3 MONTHS 2018/19

5 5 DEAR SHAREHOLDERS, Sugar prices in the EU and on the world market are under considerable pressure. Since October 2017 when the quota system came to an end sugar prices in the EU have fallen by more than EUR 120 per tonne, following the trend on the world market. The figures for the first quarter of 2018/2019 clearly reflect this decline in prices: revenues fell by approximately 18 per cent year on year. Net income for the period stood at EUR 3 million compared with EUR 42 million in the previous year. This collapse in income was expected due to the decline in prices and we are prepared for it. However, nobody can continue to produce sugar profitably at such prices and this year, we will do everything in our power to avoid making a loss. The current situation leads us to believe that prices will not recover in the near future and we must therefore expect further declines in income for the financial year 2019/2020. The competitive situation will inevitably result in a shake out of the market. As a large sugar manufacturer in Europe, we will play an active part in the consolidation processes and make the most of the situation. Our core market is the EU. Our focus in the EU will be on increasing competitiveness, and holding and expanding our market share. The lower sugar prices are currently causing imports of raw sugar to decline. We intend to fill this gap with beet sugar. Our customers know to appreciate our quality and sustainability certification standards as well as our comprehensive service. However, the EU s environmental regulations such as the decision to ban neonicotinoids or the planned ban on specific beet herbicides are posing quite a challenge for us and for our beet growers. Transition periods must be allowed to enable alternatives to be developed. From a global point of view, the sugar market is a growing market. In Asia and Africa in particular, sugar consumption will continue to grow in the long term in line with increasing prosperity and growing population sizes. We have a close eye on these markets and will serve them either with exports or our own production. The competitive pressure on the sugar market is doubtlessly intense. Nevertheless, we remain convinced that we will come out of this phase stronger, not least thanks to our partnerships with our beet growers and with you, our shareholders. We are debt free, have modern and efficient plants at our disposal, are active in high yielding growing regions, have an attractive marketing region and have a highly motivated team with a wealth of sugar expertise. This will all pay off. Yours faithfully, The Executive Board Dr Lars Gorissen Axel Aumüller Erik Bertelsen INTERIM REPORT 3 MONTHS 2018/19

6 6 INTERIM REPORT SITES IN EUROPE EARNINGS AND FINANCIAL POSITION AND NET ASSETS SITES IN EUROPE GROUP HEADQUARTERS D 1 Braunschweig REGIONAL ADMINISTRATION DK 2 Copenhagen SUGAR PLANTS AND REFINERIES D 3 Clauen 4 Nordstemmen 5 Uelzen 6 Klein Wanzleben 7 Schladen DK 8 Nakskov 9 Nykøbing S 10 Arlöv 11 Örtofta FIN 12 Porkkala 13 Säkylä LT 14 Kèdainiai PL 15 Chełmża 16 Opalenica SK 17 Trenč ianska Teplá LIQUID SUGAR PLANTS D 4 Nordstemmen 18 Groß Munzel S 10 Arlöv FIN 12 Porkkala OTHER SITES DK 2 NP Sweet. Copenhagen D 6 Bioethanol. Kl, Wanzleben B 21 Brussels office SUGAR PLANTS NON-CONSOLIDATED MINORITY HOLDINGS CZ 19 Dobrovice 20 Ceské Meziříčí INTERIM REPORT 3 MONTHS 2018/19

7 7 EARNINGS AND FINANCIAL POSITION AND NET ASSETS GENERAL REMARKS The quarterly financial reports as of 31 May 2018 for (Küchenstrasse 9, Braunschweig, Germany) have been prepared in accordance with the International Financial Reporting Standards (IFRS) adopted and published by the International Accounting Standards Board (IASB) and the IFRS Interpretations Committee (IFRS IC) as applicable in the European Union (EU IFRS). The financial statements comply fully with EU IFRS and give a true and fair view of the net assets, financial and earnings position of and its consolidated sub sidiaries, joint ventures and associated companies (hereinafter known as Nordzucker Group or Group ). No changes have been made to the accounting policies used for the preparation of the annual IFRS consolidated financial statements as of 28 February These can be found in the Annual Report 2017/2018 ( SEASONAL SUGAR PRODUCTION The production of sugar is a seasonal business. The production phase, from the beginning of September until January, is entirely in the second half of the financial year. This should be taken into consideration when interpreting the first quarter earnings. REVENUES AND EARNINGS Manufacturing costs came in below the previous year s figure of EUR million at EUR million primarily as a result of a decline in the average beet costs following the end of the sugar market regime in its existing form and a decline in the use of purchased sugar against the previous year. CONSOLIDATED REVENUES in EUR m months 2017/18 3 months 2018/19 Sales costs were up to EUR 37.7 million, mainly due to higher expenses for rent, leases and external storage ( prior year period: EUR 35.1 million). Administrative expenses came to EUR 19.7 million, slightly below the figure of EUR 21.3 million in the same period of the previous year. Other income increased significantly to EUR 8.9 million (prior year period: EUR 4.6 million), with other expenses down slightly to EUR 3.6 million (prior year period: EUR 4.5 million). At EUR 47.0 million, personnel expenses were somewhat higher than last year (EUR 46.3 million). Depreciation, amortization and impairment was down from the same period of the previous year at EUR 16.1 million (prior year period: EUR 17.2 million). In the first three months of the financial year 2018/2019, the Nordzucker Group generated revenues of EUR million, approximately 18 per cent less than in the previous year. The fall in revenues was mainly due to the lower sugar prices. The slightly higher sales volumes in comparison with the same period of the previous year only slightly counteracted the drop in prices. Revenues from bioethanol and animal feed remained largely constant compared with the previous year. The operating result (EBIT) of the Nordzucker Group totalled EUR 7.3 million in the first three months of the 2018/2019 financial year, compared with EUR 56.4 million in the same period of the previous year. This includes income from the reimbursement of production levies from the 1999/2000 and 2000/2001 financial years amounting to EUR 2.7 million, which was reported under other income in the income statement. INTERIM REPORT 3 MONTHS 2018/19

8 8 INTERIM REPORT EARNINGS AND FINANCIAL POSITION AND NET ASSETS EVENTS AFTER THE BALANCE SHEET DATE OUTLOOK CONSOLIDATED EBIT in EUR m CASH FLOW AND BALANCE SHEET months 2017/18 3 months 2018/19 7 Cash flow from operating activities of EUR 10.5 million in the first three months of the 2018/2019 financial year was significantly lower than the previous year s figure (EUR 61.3 million). This is primarily due to the fact that Nordzucker s earnings before tax were EUR 48.5 million lower than in the same period a year ago. Financial income of EUR 0.4 million was roughly equal to the previous year s figure of EUR 0.7 million. Financial expenses of EUR 2.3 million were slightly lower than the previous year s figure of EUR 3.3 million. In the first three months of the 2018/2019 financial year, the Nordzucker Group reported net income before minority interests of EUR 3.4 million, well below the net income of EUR 41.5 million in the same period of the previous year. The reason for the significant decline in income was the steep drop in sugar prices. CONSOLIDATED NET INCOME FOR THE PERIOD in EUR m Cash flow from investing activities resulted in net cash inflow of EUR 51.9 million in the first three months of the 2018/2019 financial year, whereas net cash outflow of EUR 64.8 million was recorded in the same period of the previous year. This change was due to current securities maturing in the reporting period, leading to proceeds of EUR 70.0 million. Cash flow from financing activities amounted to EUR 0.6 million (same period of the previous year: EUR 5.2 million); the cash outflow in the same period of the previous year was the result of a repayment of a bilateral credit by a subsidiary months 2017/18 3 months 2018/19 3 Total consolidated assets came to EUR 2,023.4 million as of the end of the reporting period on 31 May 2018 (31 May 2017: EUR 2,009.1 million). Current financial assets declined significantly by EUR 42.6 million to EUR 56.0 million due to the conversion of current securities to cash. NET DEBT ( ) / INVESTMENT (+) in EUR m 500 Other non current provisions increased by EUR 27.7 million to EUR 79.2 million. Consolidated equity increased by EUR 14.9 million to EUR 1,428.7 million BREAKDOWN OF THE ASSETS AND LIABILITIES MAKING UP THE 31/5/2018 BALANCE SHEET TOTAL in EUR m months 2017/18 3 months 2018/19 2,200 1,800 1,400 2,023 44% 2,023 71% 1,000 25% % Assets 19% 10% Equity & liabilities Non-current assets Equity Inventories Non-current liabilities Other current assets Current liabilities INTERIM REPORT 3 MONTHS 2018/19

9 9 Cash and cash equivalents exceeded financial liabilities by EUR million at the end of the reporting period as of 31 May At the end of the same period in the previous year (31 May 2017), the excess amount was EUR million. EVENTS AFTER THE BALANCE SHEET DATE On 4 July 2018 the Chairman of the Supervisory Board of Hans Christian Koehler passed away suddenly and unexpectedly. As Deputy Chairman of the Supervisory Board, Jochen Johannes Juister will assume his duties for the time being. OUTLOOK The Nordzucker key figures for the first three months of the financial year 2018/2019 are in line with expectations. The deregulation of the sugar market in the EU has made the economic situation much less promising. The world market price for sugar reached its lowest point so far in February 2018 at EUR 289 per tonne (based on London No. 5). There was no significant recovery in sight at the end of the first three months of the 2018/2019 financial year. Since the abolition of production quotas, the EU sugar market has been directly impacted by the international sugar market. For this reason, and due to the production surpluses in the EU, the average price of sugar has also remained low here; at the end of April 2018, the price per tonne stood at just EUR 362. These constantly low prices lead us to expect a significant decline in the results (RoCE, EBIT margin, net income and EBITDA margin) for the 2018/2019 financial year that will put the figures below those seen in the 2017/2018 financial year. Since the company has prepared itself thoroughly for the end of the sugar market regime that has been in place until recently and the measures taken to improve efficiency and optimise planning are showing positive results, the objective for the current financial year is to avoid making a loss. If the prices remain as low as they currently are, however, then we must be prepared for a further decline in earnings in the 2019/2020 financial year. Nevertheless, we assume that the drop in the sugar price will not be permanent. Nobody can produce sugar profitably at the current prices. Solid financing, good infrastructure for production, an attractive marketing region and the expertise of our workforce all make Nordzucker a powerful player on the EU sugar market. The market will consolidate further, driven by the competitive pressure it faces. The company is well set up to play an active role in this market consolidation and to further expand its position in Europe. Nordzucker s goal is to secure and increase its market shares. The company will benefit from a solid capital structure that will enable it to make further investments in its core business. Growth opportunities outside of Europe will also be considered. Nordzucker has success fully dealt with all of the changes in Europe to date and has emerged from them even stronger. Even with increasingly competitive market conditions, the company will continue on this successful path. INTERIM REPORT 3 MONTHS 2018/19

10 10 INTERIM REPORT CONSOLIDATED FINANCIAL STATEMENTS NORDZUCKER AG CONSOLIDATED FINANCIAL STATEMENTS NORDZUCKER AG CONSOLIDATED INCOME STATEMENT, Braunschweig, Germany, for the period from 1 March 2018 to 31 May 2018 in EUR thousands 1/3/ /5/2018 1/3/ /5/2017 Change Revenues 343, ,283 75,066 Production costs 283, ,623 21,914 Gross profit 59, ,660 53,152 Sales costs 37,737 35,091 2,646 Administrative expenses 19,741 21,300 1,559 Other income 8,875 4,624 4,251 Other expenses 3,649 4, Operating result (EBIT) 7,256 56,407 49,151 Financial income Financial expenses 2,302 3, Result from companies accounted for using the equity method Earnings before taxes 5,333 53,793 48,460 Income taxes 1,923 12,266 10,343 Consolidated net income 3,410 41,527 38,117 of which attributable to non-controlling interests 626 1,166 1,792 of which attributable to shareholders of the parent company 4,036 40,361 36,325 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME in EUR thousands 1/3/ /5/2018 1/3/ /5/2017 Change Consolidated net income 3,410 41,527 38,117 Remeasurement of defined benefit plans Deferred taxes on items of other comprehensive income not reclassified to the income statement Other comprehensive income from items not reclassified to the income statement Exchange differences on translating foreign operations 6,485 1,219 5,266 Net result of cash flow hedges 3,537 1,240 4,777 Deferred taxes on items of other comprehensive income reclassified to the income statement ,022 Other comprehensive income from items reclassified to the income statement 3,726 2,215 1,511 Consolidated comprehensive income after taxes ,312 39,628 of which attributable to non-controlling interests 630 1,170 1,800 of which attributable to shareholders of the parent company ,142 37,828 INTERIM REPORT 3 MONTHS 2018/19

11 11 CONSOLIDATED CASH FLOW STATEMENT, Braunschweig, Germany, for the period from 1 March 2018 to 31 May 2018 in EUR thousands 1/3/ /5/2018 1/3/ /5/2017 Change Earnings before taxes 5,333 53,793 48,460 Interest and similar income/expenses 1,501 1,505 4 Depreciation, amortization and impairment/reversals of impairment of non-current assets 16,061 17,246 1,185 Change in provisions 18,649 9,549 9,100 Change in inventories 168, ,202 10,756 Change in trade receivables 40,021 30,673 9,348 Change in trade payables 144, , Change in other operating assets/liabilities 6,526 2,846 3,680 Gains/losses on disposal of non-current assets Other non-cash expenses/income Interest received in the financial year Interest paid in the financial year Result of companies accounted for using the equity method Taxes paid in the financial year 4,213 7,895 3,682 Cash flow from operating activities 10,457 61,274 71,731 Proceeds on disposal of property, plant and equipment Payments for investments in property, plant and equipment 17,949 14,519 3,430 Payments for investments in intangible assets Proceeds from disinvestments in current securities 69, ,998 Payments for investments in current securities 0 49,998 49,998 Cash flow for/from investing activities 51,905 64, ,707 Proceeds from borrowing Loan repayments 0 5,400 5,400 Cash flow from financing activities 600 5,220 5,820 Changes in cash and cash equivalents 42,048 8,748 50,796 Cash and cash equivalents at the beginning of the period 306, ,814 14,906 Effect of foreign exchange rate changes Cash and cash equivalents at the end of the period 348, ,074 35,821 INTERIM REPORT 3 MONTHS 2018/19

12 12 INTERIM REPORT CONSOLIDATED FINANCIAL STATEMENTS NORDZUCKER AG CONSOLIDATED BALANCE SHEET as of 31 May 2018,, Braunschweig, Germany ASSETS in EUR thousands 28/2/ /5/ /5/2017 NON-CURRENT ASSETS Fixed assets Intangible assets 20,590 20,057 19,154 Property, plant and equipment 830, , ,318 Investment property 4,947 4,963 4,440 Financial investments Shares in companies accounted for using the equity method 6,357 6,316 7,494 Other financial investments 23,032 23,032 23,040 29,389 29,348 30, , , ,446 Receivables and other assets Financial assets 373 1,264 0 Other assets ,139 1, Deferred taxes 1,845 2,116 4, , , ,464 CURRENT ASSETS Inventories Raw materials, consumables and supplies 52,384 55,841 48,650 Work in progress 46,043 74,364 55,232 Finished goods and merchandise 585, , , , , ,453 Receivables and other assets Trade receivables 146, , ,182 Receivables from related parties Current income tax receivables 1,808 2,898 1,670 Financial assets 124,431 56,004 98,603 Other assets 29,906 30,379 27, , , ,042 Cash and cash equivalents 306, , ,074 Current assets 1,293,814 1,136,664 1,130,569 Assets held for sale ,293,821 1,136,664 1,130,617 2,182,500 2,023,369 2,009,081 INTERIM REPORT 3 MONTHS 2018/19

13 13 EQUITY AND LIABILITIES in EUR thousands 28/2/ /5/ /5/2017 Shareholders equity Subscribed capital 123, , ,651 Capital reserves 127, , ,035 Retained earnings 1,197,113 1,201,149 1,175,849 Other comprehensive income 59,838 63,560 55,610 Equity attributable to shareholders of the parent company 1,387,961 1,388,275 1,370,925 Non-controlling interests 41,035 40,405 42,901 1,428,996 1,428,680 1,413,826 Non-current provisions and liabilities Provisions for pensions and similar obligations 216, , ,812 Other provisions 81,050 79,188 51,484 Financial liabilities 1,197 1,197 1,441 Liabilities towards related parties 5,500 5,500 5,500 Other financial liabilities Other liabilities 5,085 5,002 5,348 Deferred taxes 71,644 70,264 74, , , ,588 Current provisions and liabilities Provisions for pensions and similar obligations 11,537 10,570 10,501 Other provisions 55,861 40,245 49,147 Financial liabilities 4,737 5,306 6,851 Current income tax liabilities 15,813 16,525 23,364 Trade payables 215,629 70,111 77,677 Liabilities towards related parties 33,605 33,340 26,904 Other financial liabilities 6,278 6,726 7,643 Other liabilities 29,068 34,254 37, , , ,667 2,182,500 2,023,369 2,009,081 INTERIM REPORT 3 MONTHS 2018/19

14 14 INTERIM REPORT CONSOLIDATED FINANCIAL STATEMENTS NORDZUCKER AG FINANCIAL CALENDAR ONLINE PUBLICATIONS CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS EQUITY, Braunschweig, Germany in EUR thousands Subscribed capital Capital reserves Retained earnings Other comprehensive income Equity attributable to shareholders of the parent company Noncontrolling interests Total equity As of 1/3/ , ,035 1,135,496 53,392 1,332,790 41,731 1,374,521 Net income 40,361 40,361 1,166 41,527 Other comprehensive income 2,219 2, ,215 Consolidated comprehensive income 40,361 2,219 38,142 1,170 39,312 Dividend payment Other As of 31/5/ , ,035 1,175,849 55,610 1,370,925 42,901 1,413,826 As of 1/3/ , ,035 1,197,113 59,838 1,387,961 41,035 1,428,996 Net income 4,036 4, ,410 Other comprehensive income 3,722 3, ,726 Consolidated comprehensive income 4,036 3, Dividend payment Other As of 31/5/ , ,035 1,201,149 63,560 1,388,275 40,405 1,428,680 INTERIM REPORT 3 MONTHS 2018/19

15 15 FINANCIAL CALENDAR 15 October January 2019 Publication of the quarterly report 6 months 2018/19 Puclication of the quarterly report 9 months 2018/19 ONLINE PUBLICATIONS The following publications can be downloaded from Annual Reports and Interim Reports Declaration of compliance Letter to shareholders Subscribe to the Interim Reports at INTERIM REPORT 3 MONTHS 2018/19

16 IMPRINT Küchenstrasse Braunschweig Germany Telephone: +49 (0) Fax: +49 (0) info@nordzucker.de Communications & Public Affairs Christian Kionka Telephone: +49 (0) Sven Weber Telephone: +49 (0) press@nordzucker.com Investor Relations Bianca Deppe-Leickel Telephone: +49 (0) ir@nordzucker.de Share register Nicole Riedel-Elias Telephone: +49 (0) aktien@nordzucker.de Printed copies of this Interim Report for the Nordzucker Group are also available in German. Alternatively, the report is available online in German or English and can be downloaded as a PDF at from the Download Centre.