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Expect More Sugar Factory Closures in Europe, Says Cristal Union

Published on Jun 10 2019 7:50 AM in Supply Chain tagged: Europe / Sugar / Trending Post / Cristal Union

Expect More Sugar Factory Closures in Europe, Says Cristal Union

More European sugar factories will close as companies are forced to cut costs after a slump in prices since the end of EU production quotas wiped out profits, French sugar group Cristal Union's chief executive recently said.

A surge in sugar output after the European Union abolished production quotas in 2017 prompted a collapse in prices that hit Europe's sugar industry hard, with Cristal Union posting its first ever net loss in its last fiscal year.

The cooperative group, the EU's fourth-largest sugar producer comprising 9,800 members, announced in April it would shut two sugar factories in France next year, as it expects global oversupply to continue pressuring prices.

"Everyone will be restructuring. We hear about it everywhere. There are those who have already announced it and those who will announce it but everyone will be forced to do it," Cristal Union CEO Alain Commissaire told reporters.

Factory Closures

Suedzucker, the EU's largest sugar refiner, said in February it would close two plants at its French branch Saint Louis Sucre, while unlisted Nordzucker said a month later it would close a factory in Sweden.

In contrast, France's largest producer, Tereos, has repeatedly said it has no closure plans.

Cristal Union had envisaged partnerships with other companies, but these were blocked by the European Commission, Commissaire said. He declined to give details.

The group had no ongoing merger plans, but remained on alert for anything happening at other European producers, Chairman Olivier de Bohan told Reuters after the news conference.

Cristal Union posted a net loss of €99 million ($111 million) in its 2018/19 financial year ending on 31 January, down from a profit of €49 million in 2017/18. Revenue dropped 16% to 1.7 billion euros.

The group made earnings before interest, tax, depreciation and amortisation (EBITDA) of €10 million in 2018/19 against €170 million in the previous fiscal year.

Both Suedzucker and Nordzucker also saw a big hit to their results in the past financial year. Tereos is due to release results next week but its chief executive has already said the group would be in the red for the second year running.

De Bohan said about 15 EU factories were about to be shut or mothballed.

"And there will be other announcements in the future that's for sure," he said.

News by Reuters, edited by Libby Seline, Checkout. Click subscribe to sign up for the Checkout print edition.

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