Südzucker, Europe's largest sugar refiner, on Thursday posted a 142% surge in second-quarter earnings and reaffirmed its estimate of a stronger annual profit with its sugar and biofuels sectors performing well.
Südzucker posted an increase in group operating profit to €68 million ($80 million) in the second quarter of 2020/2021 fiscal year ended August 2020, from €28 million in the previous quarter.
The company said it benefited from a surge in sugar prices.
Südzucker also confirmed its previous forecast of annual group operating profit of €300 million to €400 million, up from €116 million the previous year, despite the fallout from the coronavirus crisis.
In the second quarter, the sugar sector was able to cut operating loss to €41 million from €55 million a year earlier.
'Higher Sugar Sales'
'The improvement was driven mainly by higher sugar sales due to the price increase since the beginning of the 2019/20 sugar marketing year, which more than offset lower sales volumes and higher production costs,' Südzucker said.
But a disappointing sugar beet crop expected in Europe this year, weaker trend in world sugar prices and the economic uncertainty from COVID-19 are still creating uncertainty for the sugar sector, it said.
The company estimates that the sugar segment's full-year operating result will range between a loss of €100 million and loss of €50 million, against a loss of €236 million last year.
'Reduced Sugar Production'
'In Europe, smaller cultivation areas and renewed dry weather conditions in important cultivation regions along with more serious pest infestations will again lead to reduced sugar production,' it said.
The brief price recovery in world sugar markets is largely over, it said.
With poor sugar beet harvest and an overall lean demand caused by the pandemic, traders expect a sharper decline in sugar sales than previously forecast.