Letter to the shareholders Current information for the shareholders of Nordzucker AG, Nordzucker Holding AG and the partners of Union-Zucker Südhannover GmbH Issue 01 | 15 January 2015
Dear shareholders, For more than a year now, global sugar prices have been on a downwards trend, which continued in the third quarter. The reasons for the ongoing erosion of prices in the world market are high stock levels and production that exceeds global consumption. In the EU the price for sugar has also dropped sharply – most recently to EUR 453 per tonne in October 2014, as reported by the EU. For the third quarter we are anticipating further price decline. The price erosion in the EU is largely the result of high stocks, caused in turn by persistently high imports, a lack of export opportunities and a record harvest this year. High stocks and the impending expiry of the sugar market regime in 2017 have resulted in an intensive crowding out for markets and customers in recent months. Business performance Just as it affected the earnings of the first six months, this operating environment had a severe impact on our revenues and earnings in the first nine months of our financial year. In the first nine months of the 2014/2015 financial year, Nordzucker generated revenues of EUR 1,457.6 million, which was well below the figure of EUR 1,849.7 million for the same period last year. This decline was the result of much lower prices and lower sales volumes. In line with this price trend, net income for the period fell considerably from EUR 257.8 million to EUR 74.4 million. Outlook Looking at the trend to date and the current market situation, we are assuming that revenues and earnings will decline significantly in the financial year 2014/2015. It now appears that prices for new orders in the EU have bottomed out, but long-term contract commitments mean that a recovery will not be reflected in the results in the near future. The next two years will therefore be very tough, and the year 2015/2016 could well be the most challenging in Nordzucker’s entire history. Given the market situation described here, it will be very difficult to avoid a loss in the upcoming financial year.
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