Letter to the shareholders Current information for the shareholders of Nordzucker AG, Nordzucker Holding AG and the partners of Union-Zucker Südhannover GmbH Issue 3 | 3 June 2014
Dear shareholders, We look back on an exciting year which was characterised by two completely different halves. The bottom line is that we reported a very good result in the 2013/2014 financial year, thereby laying the foundations for growth opportunities. At the same time, we were able to achieve the targets under the long-term “Profitability plus” programme ahead of schedule and have also paid off our debt in full. These are important requirements as we prepare for changes in the course of the market liberalisation starting in 2017, the effects of which are already being clearly felt. In the 2013/2014 financial year, we generated revenues of EUR 2,360.9 million (previous year: EUR 2,442.8 million) and net income after minority interests of EUR 201.3 million (previous year: EUR 359.4 million) and were able to close the year at a very good overall level. The stable revenues are largely due to increases in sales, which compensated almost fully for lower prices for quota and non-quota sugar. Over all, a clear downward trend in prices could already be seen in the last two quarters of the past financial year in particular. The operating result (EBIT) came to EUR 298.9 million (previous year: EUR 506.3 million) and includes the full amount of impairment losses on goodwill for Nordic Sugar. This impairment charge was made in order to reflect the lower yield expectations for the future (SMR expiry in 2017) following very profitable years and an EBIT of EUR 184 million for Nordic Sugar in 2013/2014. Nordzucker is financially very well positioned for the future: its equity increased by more than seven per cent to EUR 1,385.8 million. We were able to increase the equity ratio from 53.7 per cent in the previous year to 59.3 per cent. We have fully repaid our net debt thanks to the positive business performance. As of the reporting date, cash and cash equivalents exceeded financial liabilities by EUR 52.4 million. Together with the Supervisory Board of Nordzucker AG, we will propose the payment of a dividend of EUR 1.30 per share at the Annual General Meeting on 10 July 2014 – this is a very high dividend seen in a long-term comparison. We are thereby enabling you, the shareholders, to participate in the previous year’s good earnings. At the same time, a considerable portion of earnings has been retained to finance future profitable growth within the company. In the past financial year, we laid some important foundations and achieved some key milestones, which we set out to do on our path towards a time without quotas, with volatile sugar prices and tougher competition.
Nordzucker AG l P.O. Box 49 21 l 38039 Braunschweig l Phone +49 531 2411-0 l ir@nordzucker.de l www.nordzucker.de
We achieved the savings target for our “Profitability plus” efficiency programme in 2013/2014 – one year ahead of schedule. With investments in our plants totalling EUR 78.7 million, we increased both market and customer orientation, among others, boosted efficiency and took measures to further reduce our impact on the environment. Projects to increase energy efficiency and create additional silo capacities will remain the focus of investment in the years ahead. We are also planning to increase our investment volume substantially. Outlook The lower sugar prices had a noticeable impact on revenues and earnings, particularly in the second half of the 2013/2014 financial year. Price pressure will continue to be felt as a result of high stock levels in the EU and very low prices on the global market at present. Revenues and earnings will fall sharply in the current 2014/2015 financial year. The very good years are behind us for now, and this applies, in particular, to the European sugar business. We are now in a period of transition that will prove to be challenging for us. Sugar has a future Our measures to increase efficiency have made a significant contribution to earnings over the past few years. We will continue to work resolutely to improve our competitiveness, so as to be able to hold our ground in the market following the end of the current sugar market regime on 30 September 2017. We are a strong sugar company in the European market and we are outstandingly well positioned – in terms of both our finances, our technical equipment and, in particular, our motivated employees. However, future strength requires additional growth. In Europe, we are facing difficult conditions here: sugar consumption will, at best, stagnate, while the production of sugar and isoglucose will increase. European competition law will also put the brakes on growth within Europe. For this reason, we need to turn to the growth markets of Africa and Asia. We will examine potential growth opportunities responsibly and with care. At the same time, however, our message is clear: beet farming in our core European regions has a future. We are confident that you, our shareholders, will stay with us in future and keep Nordzucker strong. Beet development above average Beet development was positively affected by much earlier sowing in virtually every region where Nord zucker is active. Overall, beet development is shaping up very well. Most cultivation areas closed the rows at the beginning of June in Germany. This very early date represents the best condition for a good harvest. Data collection for tax purposes – your cooperation is important Due to a change in the law, Nordzucker AG and its two holding companies are obliged to withhold at source and pay any church tax due on dividend income. In order to obtain information from the Federal Tax Office regarding the amount of church tax to be deducted, we require the tax identification number and the date of birth of all shareholders and partners. To this end, you will have recently received a letter written jointly by Nordzucker AG, Nordzucker-Holding AG and Union-Zucker Südhannover GmbH, in which we informed you of the login data needed to electronically record the required information. If you do not have access to the internet, we also provide a telephone service (+49 531 2411 550, Monday to Friday from 7 a.m. to 4 p.m.). Please note the information and explanations in the letter. If you have not yet responded, we kindly ask you to do so by 13 June 2014. Thank you for your cooperation. Nordzucker AG The Executive Board
You can find the 2013/2014 Annual Report in the Shareholders section at www.nordzucker.de.
Nordzucker AG l P.O. Box 49 21 l 38039 Braunschweig l Phone +49 531 2411-0 l ir@nordzucker.de l www.nordzucker.de