Letter to the shareholders Current information for the shareholders of Nordzucker AG, Nordzucker Holding AG and the partners of Union-Zucker Südhannover GmbH Issue 03 | 27 July 2015
Dear shareholders, This year’s Annual General Meeting of Nordzucker AG on 16 July took place at a time of great change, yet still had a message: the shareholders support the company’s course even when times are challenging. Under the title “Rethinking sugar”, we explained how the company intends to address the challenges of a European sugar market without quotas by means of efficiency gains and greater proximity to customers and the market. Excellent campaign and difficult market situation The last financial year saw an exceptionally good and long campaign, with excellent beet processing in the factories and top yields in the fields. It was met by a market that was difficult overall, with high sugar stocks and a sharp fall in prices as competition became more intense. So revenues fell by more than 20 per cent in the 2014/2015 financial year to EUR 1,866 million (previous year: EUR 2,361 million). Nordzucker also sustained a steep drop in the operating result (EBIT) from EUR 299 million the previous year to EUR 26 million. Nordzucker’s future course must be adapted to the volatile world market: by streamlining processes, increasing efficiency and focusing sharply on the market, the Group intends to prepare itself to face greater competition for market share. Unfortunately we cannot rule out a loss in the current financial year. That makes it all the more important to pool our strengths and look to the future – it is now that the framework is being set for the sugar industry and beet cultivation in Europe. Results of the voting The Annual General Meeting confirmed the path taken by the company by endorsing the actions of the Executive Board and Supervisory Board by a nearly unanimous vote. Shareholders also approved the dividend proposal of EUR 0.10 per share by a very large majority. A total of EUR 4.8 million is to be distributed. The period of office of the Supervisory Board member Dr Karl-Heinz Engel (Hochwald Foods) ended at the close of the Annual General Meeting. He was confirmed in his post for an additional term. Dr Clemens Große Frie (Agravis) and Helmut Meyer (farmer from Betheln) left the Supervisory Board after a long period in office. The following new members were elected: Joachim Engelke (farmer, Giesen-Hasede) and Friedrich Christoph Heins (farmer, Uehrde). All voting results can be found online at: http://www.nordzucker.de/aktionaere/aktionaere/nordzucker-ag/hauptversammlung.html Nordzucker AG l P.O. Box 49 21 l D-38039 Braunschweig l Phone +49 531 2411-0 l ir@nordzucker.de l www.nordzucker.de
Constitutive meeting of the Supervisory Board After the Annual General Meeting the newly elected Supervisory Board of Nordzucker AG came together for its constitutive meeting. Hans-Christian Koehler – farmer from Barum-Eppensen – was elected as Chairman of the Supervisory Board and Jochen Johannes Juister was confirmed as Deputy Chairman for the shareholder representatives and Dieter Woischke as Deputy Chairman for the employee representatives. Annual General Meeting of Nordzucker Holding AG approves change to the Articles of Association regarding delivery rights The supply rights currently applicable shall be dropped at the end of the sugar market regime and its quota system. The delivery right anchored in the Articles of Association of Nordzucker Holding AG will then take effect. This stipulates that beet-growing shareholders have a guaranteed right to the delivery of beet from the 2017 growing year. The delivery right can be fulfilled using the shareholder’s own beet cultivation. At the Annual General Meeting of Nordzucker Holding AG on 15 July, the shareholders approved the proposed change to the Articles of Association regarding the exercising of delivery rights. According to this, the delivery right may be transferred if this occurs when the land is leased or otherwise relinquished in the catchment area. The change to the Articles of Association was approved by a large majority (69.2 per cent) following intensive talks, with only a simple majority required. Detailed voting results can be found at www.nordzuckerholding.de. The shareholder meeting of Union-Zucker Südhannover GmbH already approved a corresponding change to its articles of association on 1 July. We welcome the strategic decision on delivery rights taken at the Annual General Meeting of Nordzucker Holding AG and the shareholder meeting of Union-Zucker Südhannover GmbH. It sends an important signal because both the beet-growing and other shareholders are the foundation of the company. First quarter: clear drop in revenues and earnings once again During the first three months of the 2015/16 financial year, the company reported a further significant decline in revenues and net income, in line with expectations. The first quarter closed with a loss. Revenues in the reporting period came to EUR 374 million and were thus 25 per cent below the previous year’s figure (prior-year period: EUR 501 million). The fall can primarily be attributed to the continued low prices for quota sugar. Nordzucker has closed the quarter with a loss for the period of EUR 6.9 million (prior-year period: net income of EUR 24 million). The low prices are the result of intense competition in Europe as well as the downward trend in global market prices. Focus on improving efficiency Nordzucker is addressing these developments with its Group-wide efficiency programme FORCE, which will optimize costs, processes and structures. Looking ahead to 2017, we have to be competitive even when sugar prices are low and align our business with the market and our customers. The new efficiency programme is intended to deliver savings of at least EUR 50 million. We still assume that we are unlikely to report positive earnings at the end of the current financial year. Negative factors such as the high levels of sugar stocks and tougher competition will leave their mark on the current financial year. A reduction in the area under cultivation and lower supplies in the EU and on world markets will have a corresponding effect on prices. The incipient price increases across Europe will, however, first have an impact in the medium term. Nordzucker AG The Executive Board
The detailed Interim Report Nordzucker AG Three Months you can find here: http://www.nordzucker.de/en/shareholders/service-contact/downloads/interim-reports.html
Nordzucker AG l P.O. Box 49 21 l D-38039 Braunschweig l Phone +49 531 2411-0 l ir@nordzucker.de l www.nordzucker.de