Akzente 03/2012 - July 2012 by Nordzucker AG

Akzente

News from Nordzucker | Issue 2 | July 2012

Best result

Global sugar market: USDA presents initial estimate for the ďŹ nancial year 2012/2013

Nordzucker and Wilmar enter partnership

Net income more than doubled

2012/2013: All signs point towards a good beet year

Contents

8 Aim: zero accidents. With a Group-wide plan of action, Nordzucker aims to again raise awareness of occupational health and safety among all of its employees.

18 Germany’s favourite berry is the strawberry. Schwartau’s fruit scout knows where the best ones grow.

t t

NEWS UPDATE 4 Best result in the company’s history 6

Profiting from one another – Nordzucker and Wilmar Sugar enter partnership

8 Occupational health and safety: “No need for accidents to happen!” 9 Safety wins: Nils Marwede receives the 2012 occupational health and safety award 10 Nordzucker’s internal audit department – Sparring partner for all other departments 11 Nordic Sugar under new management – Flemming Lyngholm assumes leadership of the Northern Europe region 12

SERIES: Profitability plus: Positive forecast after successful year

BEET 13

Lithuania: ‘Golden Beet’ for the best

SERIES: 20 · 20 · 20: Cultivation trials

15 All signs point towards a good beet year

MARKETS AND CLIENTS 16 Spotlight on the market: High prices have a long reach 18 Sweet spread with a traditional touch – A visit to the Schwartauer Werke factories

COMMUNITY 20

Recipe: Blueberry and blackberry compote with cinnamon cream

Editorial

» The European market needs a predictable and reliable supply of sugar – that’s why we need the sugar market regime through to 2020.

Hartwig Fuchs

Dear shareholders and friends of Nordzucker, At the end of May we had the opportunity to present outstanding results at our press conference on the financial statements. At EUR 208 million, we more than doubled the Group’s p rofit against the previous year. In the same period, we managed to increase our operating result (EBIT) from EUR 188 million to EUR 315 million. This success is rooted in a number of different factors. In the sale of sugar, we have benefited from the increased price in the EU. And besides p rices, we have also increased our company’s efficiency, thus enabling us to cut costs. As our shareholders, we also want you to share in this success. For this reason, the Annual General Meeting of Nordzucker AG will be proposing a dividend of EUR 1 per share this year, more than double last year’s figure. Nordzucker has grown in recent years and has developed into a truly European company. The Nordzucker Group’s regions profit from each other’s expertise and we all benefit from the feedback that we receive in our daily work as a result of our varied cultural backgrounds. All this moves Nordzucker forwards. The fact that we are now a truly European group is shown no less by the r evenues, with more than half of the EUR 2,018 billion being earned outside of Germany. And yet, we must avoid concentrating solely on the road already travelled. We must consider what lies ahead, too. We are faced with changes in the European sugar market regime. The European market needs a predictable and reliable supply of sugar – that’s why we need the sugar market regime through to 2020. Not to mention that we are preparing ourselves for the time afterwards, as well. Europe needs sugar from the global market, and this is where our partnership with Wilmar Sugar is important. We will be shrewd in determining the further steps to ensure Nordzucker’s success. My colleagues and I on the Executive Board look forward to meeting many of you at the Annual General Meetings. Should we not see you, we’d like to take the opportunity now to wish you a pleasant summer with just the right amount of rainfall. Best regards,

Hartwig Fuchs

Akzente 02/12

NEWS UPDATE

Best result in the company’s history

Nordzucker has benefited in all regions from significantly higher sugar prices.

Nordzucker doubles profit and dividend

Glowing figures The figures that were subsequently presented supported his statement. The Nordzucker Group’s revenues rose year on year by 11 per cent to EUR 2 billion. More than half of this was generated in

the Eastern and Northern Europe regions. “This is a clear sign of how Nordzucker has become a truly European company in recent years. We were able to capitalise on our leading market position in Northern Europe, and we made the most of the opportunities that arose in the much more volatile markets of Eastern Europe,” continued Fuchs. The operating result and net income were also increased significantly in comparison to 2010/2011, itself already a very good year, with net income increasing more than twofold to approximately EUR 208 million. Net debt was reduced considerably once again and equity grew in parallel, now coming to EUR 999 million.

Net income more than doubled – EBIT increased considerably

Revenues well up on previous year

“As a businessman following the traditions of the Hanseatic League, I’m not at all keen on throwing around superlatives. Still, I think it’s safe to say that 2011/2012 was a very good year for Nordzucker,” said Hartwig Fuchs, Chief Executive Officer of Nordzucker AG, opening his speech at the press conference on the financial statements held on 31 May 2012 in Braunschweig.

in EUR million

Total revenues (EUR million)

Net income

EBIT 315

188

1,806

1,815

2,018

208

Revenues by region Northern Europe

Central Europe

40 %

46 %

-10 Eastern Europe

2009/2010

2010/2011

2011/2012

2009/2010 2010/2011 2011/2012

14 %

NeWS UPdAte

Good prices achieved The price of sugar in the EU increased significantly compared to the previous year. Nordzucker was able to benefit from this in all regions. “However, most critical was the fact that we managed – in spite of the tense supply situation – to supply all of our customers with sugar. Here, we made use of the opportunities offered by the European Commission for the conversion of non-quota sugar, further increasing the import of sugar from the global market. We also managed to shrewdly control the flow of sugar within the Group to optimise the supply situation,” said Mats Liljestam, Chief Marketing and Sales Officer, explaining the market situation. Shareholders take share in the success Nordzucker considers providing the shareholders with an appropriate share of the result to be a matter of course. Nordzucker AG will therefore be proposing a dividend of EUR 1 per share, up from 46 cents last year, at this year’s Annual General Meeting. In doing so, it has more than doubled the dividend from the previous year. At the same time, a considerable portion of the earnings has been retained to finance future profitable growth within the company. Set course for the future “Our success clearly shows that we were right to dispose of unprofitable investments in recent years in order to focus entirely on sugar, which is our core line of business. We want to achieve further growth, make the company even more international and, at the same time, press on with integration within the Group,” said Fuchs, outlining the plans for the future. Nordzucker has been successful over the past two years, but the goal has not been to maximise short-term profit. Instead, the aim has been to achieve lasting and sustainable profitability, as this is the only way to safeguard beet cultivation in Germany and the EU in the long term. n

Development of dividend per share in EUR

1.20 1.00

1.00 0.80 0.49

0.49

0.48

0.46

0.40 0.20 0.00

0.22 0.28

increasing efficiency remains a hot topic “The figures for the last two financial years demonstrate how well the company has been developing. But we also know that the markets will not stay this way forever, so we have to prepare ourselves for new situations. This includes continuing to work on improving our efficiency, our processes and the way we work together. Our efficiency programme Profitability plus, which will stay in force until 2014/2015 with cost savings totalling EUR 67 million, remains an important cornerstone for our further development. It has allowed a large number of employees from all areas of the company to contribute their ideas to make the company stronger. Of course, efficiency alone is not enough to achieve long-term success in the market, but without efficiency, we won’t be able to achieve success in the long term.”

Opening up new perspectives. Acting jointly.

Bianca deppe-leickel Manager investor Relations

0.60

dr. Michael Noth Chief Financial Officer

The Nordzucker AG Annual Report keeps you up to date about the current business situation and the development of the company. You will also find detailed interviews and reports on topics related to markets and future prospects. We would be glad to send you a copy. Simply send an email with your address to IR@Nordzucker.de. You can also find the 2011/2012 Annual Report in our Download Center under ‘Shareholders’ at www.nordzucker.de.

Opening up new perspective s. Acting jointly. 2011/2012 Annual Report

02/03 03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11 11/12

Akzente 02/12

NEWS UPDATE

Titel

Wilmar International Limited: Company headquarters

Profiting from one another Nordzucker and Wilmar Sugar enter partnership Since February, Nordzucker has been working in partnership with the Asian agricultural company Wilmar Sugar Pte. Ltd., a subsidiary of the Singapore-based Wilmar International Limited. Which aims are the two companies pursuing with their partnership and what are the advantages for both companies? An interview with Dr Niels Pörksen, Chief Agricultural Officer of Nordzucker AG, and Jean-Luc Bohbot, Managing D irector, Wilmar Sugar Pte.

Mr Bohbot, Wilmar Sugar is already well established in Asia, but it is practically unknown in Europe. Could you tell us briefly about your activities in the sugar sector? Jean-Luc Bohbot: Wilmar is a well establish company in Asia, leader in the edible oil crushing, refining and distribution. In

China the Group has a market share above 40 per cent in some edible oil. However, the Group also has a strong presence in Europe, in Germany, Netherlands, Russia and Ukraine. We are a leader in Oleochemical and biodiesel. In 2010 Wilmar acquired Sucrogen, that produces about 16 million tonnes cane and about 2,2 million tonnes raw sugar. With the Asian market in deficit, this sugar is naturally exported to the Asian markets. Sucrogen is also a large refiner in Australia (two refineries with 750,000 tonnes refining) and in NewZealand (one refinery with 250,000 tonnes refining). We acquired in Indonesia two refineries, with a total sugar production of about one million tonnes In 2011, we established Wilmar Sugar, the trading arm, present in Asia, Europe,

Africa, Brazil. We recently took a participation in a US company, precessing sugar in the US and Mexico. Dr Pörksen, why is Nordzucker working together with Wilmar Sugar? Dr Niels Pörksen: There are a number of reasons for this. Our goal is to import raw cane sugar to be processed in our refineries. This is because the European market needs imports from the global market, given that only around 85 per cent of the sugar required for human consumption in the EU may actually be produced here. Nordzucker owns refineries in the EU located at strategically valuable sites. We need raw sugar for these. Wilmar is therefore an excellent partner for the procurement of raw cane sugar, because the company has a great deal of expertise in trading.

NEWS UPDATE

Wilmar is an excellent partner for the procurement of raw cane sugar, because the company has a great deal of expertise in trading.

Dr. Niels Pörksen Chief Agricultural Officer

Importing raw sugar is one thing, but are there other opportunities afforded by the partnership with Wilmar? Dr Niels Pörksen: Yes, there are indeed. This partnership allows us to expand our network with the global markets, thereby providing us with additional sales channels for exporting EU sugar to the global market. The partnership also provides us with the means to enhance our expertise in sugar trading. Wilmar Sugar and Nordzucker operate in different parts of the globe. So why is it still of interest to work together with Nordzucker? Jean-Luc Bohbot: The sugar market is more and more globalized and integrated. Events happening in one part of the world affect the other part. The Europe sugar

market plays a crucial and center role in this globalization. Wilmar wanted to have a partnership with a key player in Europe in order to share mutual strength for common benefit. Wilmar is one of the leading producers of palm oil. Critics often claim that the expansion of palm oil plantations and the production of palm oil are not performed sustainably. What is Wilmar doing to ensure the sustainability of its operations? Jean-Luc Bohbot: Wilmar always had a very strong focus and care related to the sustainability question. We have a full department looking at those questions for our current operations and for any new investment. No investment are made without covering the sustainability consideration.

Is there any intention of taking this partnership even further? Dr Niels Pörksen: We have signed a partnership agreement that provides us with new opportunities in the harvesting of raw sugar and the trading of sugar. Whether there will be other opportunities presented by the partnership is something we will see in due course. Jean-Luc Bohbot: The partnership with Nordzucker is very important for us. We will observe precisely how this new partnership develops now that it has started, and we will consider further steps together as the situation requires it. n Interview conducted by Nina Tatter

Wilmar International Limited l

F ounded in 1991

C ompany headquarters in Singapore

O ffices in more than 50 countries

M ore than 90,000 employees

F inancial year 2010: Revenues USD 30.378 billion; profit USD 1.324 billion

F inancial year 2011: Revenues USD 44.71 billion; profit USD 1.6 billion

For more information, visit www.wilmarinternational.com. International group with headquarters in Singapore: Wilmar International Limited.

Akzente 02/12

NEWS UPDATE

Occupational health and safety is closely tied to our corporate values. Responsibility plays a rather special role here, which in turn heavily affects our operating business. Every employee is responsible at all times for their own actions!

Axel Aumüller Chief Operating Officer

“No need for accidents to happen!” Paying more attention to occupational health and safety I’m glad that the Nordzucker factories have all got off to a good start in the campaign. At Nordzucker, occupational health and safety has absolute priority. After many improvements and a favourably position in industry comparisons made by the German Sugar Industry Employers’ Insurance and Accident Prevention Association, the number of work- related accidents1 at Nordzucker sadly rose last year. There were

38 work-related accidents in 2011/2012, compared with 29 in the previous year. However Nordzucker still performs above average compared to other companies in the industry.

Rise of accidents unacceptable For Chief Operating Officer, Axel Aumüller, this rise is unacceptable. “We can’t simply take the attitude that ‘accidents just happen’ when it comes to health and safety.

Occupational health and safety The mision and vision Nordzucker wants all employees to be safe and healthy at the workplace and does not t olerate unsafe work or conditions that impair health. Nordzucker principles l We believe in safety first, the “zero accidents” philosophy and continuous improvement. l

l l

e accept that compliance is a must and that we must have a strong W Health & Safety o rganization to support and drive our work. We expect leaders to show the way and all employees actively to take part. e will train our people and implement our Health & Safety vision and W strategy through strong, certified systems and regular audits

Accidents resulting in leave of more than three days

No! There’s simply no need for accidents opposite is correct, he says. He is convinced that “work-related accidents are a matter of organisation”. “This simply means that most work-related accidents occur as a result of work processes being improperly organised.” “We’re aiming for zero accidents” Indeed, 98 per cent of work-related accidents are the result of improper organisation and mistakes. Aumüller is now determined to counter the negative trend of the previous year. Under his guidance, Nordzucker is once again placing the focus on occupational health and safety. A strategy has been agreed that contains not only an updated policy but also an ambitious action plan. “Our vision is zero accidents. This is not a topic of debate! When it comes to occupational health and safety, we aim to take on a leading role in both the sugar industry and in related industries,” says Aumüller. Campaign action plan Questions on health and safety are questions that affect every Nordzucker employee. And so Nordzucker is emphatically looking to increase the awareness of each individual when it comes to this topic. For this reason, the company is bringing active involvement and accident prevention more to the fore than ever. “Health and safety needs to rapidly become an ‘issue for everyone’,” summarises Aumüller. Basic training and safety training

NEWS UPDATE

Signal-coloured protective clothing, a helmet and safety shoes form the personal protective equipment for anyone present on Nordzucker factory premises.

All Nordzucker factories are involved to realize improvements on future occupational health and safety.

for all are intended to contribute to this. Further company tools and guidelines are being developed, for example within risk assessments and incidents reporting. Support is also provided in case of special problems. All Nordzucker factories are actively involved in the execution of the action plan, which

enters force before the next campaign. They will be supported by the health and safety working group. One health and safety result can now be seen across the Group, and that is the helmets, safety shoes and signal-coloured safety jackets, a unified set of personal pro-

tective equipment for anyone present on Nordzucker factory premises. n Iver Drabaek Sustainable Development, Copenhagen

Safety wins Nils Marwede receives the 2012 occupational health and safety award At the end of March, Nils Marwede, an electrician from the Nordzucker AG Uelzen factory, was awarded the main prize in the ‘sugar’ category for the 2012 sponsorship award for occupational health and safety. The award is organised by the German Raw Material and Chemical Industry Employers’ Insurance and

ccident Prevention Association. The award ceremony took place A with 400 guests in Frankfurt am Main’s Alte Oper. The prize of EUR 10,000 was awarded to M arwede for his development of a computerised permit. This makes it possible to improve safety during the maintenance of electrical systems. “The program I developed makes coordinating dangerous work on a system easier by ensuring that systems are not accidentally reconnected to the network while someone is carrying out maintenance. This helps to avoid severe accidents,” explained Nils Marwede after the award ceremony. An important contribution to improving health and safety Chief Operating Officer, Axel Aumüller, gave a speech in praise of Nils Marwede, showing his pleasure at the main award going to Uelzen and summarising that “the electronic permit system developed by Mr Marwede makes an important contribution to improving health and safety.” For Sven Buhrmann, director of the Uelzen factory, Marwede’s receiving the award demonstrated that “we have committed staff who participate actively towards improving their workplace, and it also shows the role that health and safety plays in Nordzucker AG’s factories.” The sponsorship award, for which a total of EUR 100,000 is given, is the highest-value award for occupational health and safety in Germany and is intended to recognise and encourage improvements in this area. This year’s prize marked the fifteenth time that it had been awarded. n nt

Nils Marwede and Axel Aumüller at the award ceremony in Frankfurt am Main.

Akzente 02/12

NEWS UPDATE

Copenhagen

Braunschweig

A valuable outside perspective: The internal audit department is responsible for ensuring that processes focus on achieving goals and are in compliance with the law.

The sparring partner for all other departments Improving processes from an outside perspective

Anna Marijke Goedeke-Huitema heads Nordzucker’s internal audit department

Since Nordzucker AG was founded, the company has grown. More and more companies operate together under the Group umbrella. The primary goal is to sell sugar and animal feed. On the whole, the organisational structure in the company has become more complex and more international in nature. In the process, the significance of clear rules and transparent processes has grown – and this is where the internal audit department comes into play.

The internal audit department examines the sugar sales process, for example. Be10

fore sugar can be used by the customers for the production of jam or wine gums, there is a large number of cogs that must first interlock and operate together. An offer is prepared, a contract for a certain quantity is signed and later, a portion of this quantity is ordered. Then comes the logistics. A lorry drives up, loads the ordered quantity of sugar with the agreed quality and delivers it. The chain of processes that takes place continues through invoicing to payment. “We support Nordzucker in achieving its goals by independently and systematically analysing the organisation and processes from an outside perspective, as it were, and then developing recommended courses of action,” says Anna Marijke GoedekeHuitema, head of internal auditing, summarising her department’s work. GoedekeHuitema and her colleagues are not involved in the day-to-day processes of the organisational unit that they audit. This makes them independent within the Group. The internal audit department examines, for example, whether processes meet applicable statutory regulations and whether

they are conducted in accordance with Nordzucker’s own internal regulations. In the case of internal regulations, for example, this might concern adherence to approval guidelines. “We examine the approval of sales agreements in the sales process. We also check whether invoices are prepared promptly, whether the receipt of payments is monitored and whether the process as a whole is efficient,” says Peter Stark. In order to examine whether processes run as planned and whether the flow of information within the organisation under audit is functional, Goedeke-Huitema and her colleagues conduct interviews with managers and employees and analyse agreements and work processes. Finally, the team documents its findings and issues recommended courses of action. “If Nordzucker is a house, then we go into every room. This means that we don’t just see individual tasks and processes, but rather the organisation as a whole,” says Karolina Damerau, illustrating the work of the internal audit department. Each of the Group companies is audited at regular >>

NEWS UPDATE

Flemming Lyngholm assumes the position of Managing Director of the Northern Europe region

Nordic Sugar headquarters on Copenhagen’s Langebrogade.

Nordic Sugar under new management Flemming Lyngholm moves to Copenhagen Since 1 June 2012, Flemming Lyngholm is the new Managing Director (MD) for the Northern Europe region. Previously, he served as the MD for Nordzucker in Eastern Europe. Now, Lyngholm is moving from Vienna back to Copenhagen, where the law graduate used to be responsible for Nordic Sugar’s activities in Lithuania. Nordzucker’s CAO, Dr Niels Pörksen, is provisionally assuming leadership of the Eastern Europe region.

that he has acquired in other areas of Nordzucker means that the team is being provided with valuable experience.” He said that Lyngholm and his team would continue working to strengthen and develop the position on the Northern European markets. Flemming Lyngholm has been a member of the expanded Nordzucker Executive Board since 2009. Now he is looking forward to his new task. “The three years that I spent working in Eastern Europe were an exciting and very fulfilling time that I shared with some great colleagues. But now I’m glad to be returning to the Nordic Sugar team.”

Strengthening and developing Northern Europe “With the appointment of Flemming Lyngholm, not only the cultural identity of Nordic Sugar is preserved, but we also expect significant progress in our growth together,” commented CEO Hartwig Fuchs. “After a period of transition, we are glad to have a full management team in Copenhagen again. Lyngholm’s knowledge of the Northern Europe region, his experience from the Eastern Europe region and knowledge

Nordzucker closes Vienna office Staff and roles moved to other locations Nordzucker’s Eastern European team is also soon due to relocate to new premises. Their Vienna office will close on 31 July. Following the closure of its Hungarian factories and the sale of the factories in Serbia, Nordzucker is relocating all

intervals. This enables the auditors to see how a certain task at an office in Poland, Sweden or Germany is performed. These comparisons enable the department to suggest ways of improving processes and structures.

“We see ourselves as the sparring partner of the departments that we audit. We’re all pursuing the same goal, namely the economic success of Nordzucker. With an unbiased perspective, we see things from a different point of view, and so together

administrative activities in Vienna to other Nordzucker offices. Irrespective of this, the Eastern Europe region will continue to be operated as an organisational unit. The staff previously working in Vienna will perform their duties at other offices. Since its foundation in 2009, this Group region has developed very successfully and today contributes a significant portion to Nordzucker’s overall result, contributing 14 per cent of revenues in the last financial year. “The necessary structural modifications have been successfully implemented by the Eastern Europe team and are an important cornerstone for the outstanding development,” commented CEO Hartwig Fuchs. “It’s time for us to become more streamlined, more efficient, and fit for the future.” The closure of the Vienna office was described by Fuchs as the first step towards a tailor-made organisational structure that Nordzucker will create in the coming months. n nt

we can improve processes and create additional value for the organisation,” summarises Goedeke-Huitema. n nt

Akzente 02/12

NEWS UPDATE

SERIES: Profitability plus

Positive forecast after successful year Profitability plus measures pay off In the second year following the launch of the Profitability plus efficiency initiative, Nordzucker has achieved its cost-saving goals. The Profitability plus measures implemented in the Central Europe region in 2010 and 2011 also earned their money. Earnings were positively influenced by ideal campaign conditions in 2011. The effects forecast in December 2011 were confirmed at the end of the financial year. Around 95

per cent of all of the measures implemented had to be scrutinised and recalculated. Nordzucker’s goal for the financial year 2011/2012 has been achieved and we look with great confidence into the future. More ideas will contribute to the success of the efficiency initiative. Udo Harten, d irector of the Klein Wanzleben factory, presents a Profitability plus project that was finished with remarkable results.

Machine transfer within seconds already earned half a million Klein Wanzleben beet slicer station After washing the beet, the beet slicer is the second station in the factory that beet pass through on their way to becoming sugar. When it was first brought into operation in 1994, the Klein Wanzleben sugar factory had two modern drum slicers that supplied a large extraction tower with beet pulp. In 2000, a second smaller extraction line was added. A third slicer of the same design has since supplied both extraction lines. Until the 2010 campaign, the slicer station was configured so that each slicer led directly to an extraction plant. The third slicer could alternately supply one or the other extraction line via a reversible conveyor belt. Aim: A consistent supply flow This has enabled the slicing work to be accomplished successfully for many years. If one machine experienced downtime, it was compensated by another. As the beet processing output rose to 16,000 tonnes per campaign day, so did the level of inconsistency with which the extraction plants were supplied with pulp. It was no longer possible to sufficiently compensate for the failure of a slicer. This negatively affected work in the extraction, the pulp press unit and pulp drying equipment, where large reductions in raw juice and variations in dry content in the pressed pulp required considerably more energy. Ideas for improving the inconsistent supply to the extraction lines by rearranging the pulp conveyor belts were rejected 12

and a fourth used slicer of the same model was installed instead. This allowed for a solution whereby the factory’s supply of pulp could be optimised in the long term in one fell swoop. Pulp quantities: controlled as needed The beet slicer station in the Klein Wanz leben factory is now configured so that, as before, one slicer feeds each extraction

plant directly. The other two slicers can alternately supply either of the extraction lines via a reversible conveyor belt. Using two-way valves below the machines and with the assistance of adjustable-speed motors, we can now control the pulp quantities as needed. If a machine suddenly experiences downtime, this now has hardly any influence on the extraction work. Within seconds, the c ontrol system

“Inconsistencies in slicing have a negative impact on all the subsequent stations in the factory.” Director Udo Harten in the sugar building of the Klein Wanzleben factory.

BEET

has adjusted the pulp quantities in the remaining machines. Significant energy savings and consistent raw juice quality Nordzucker invested EUR 390,000 in this Profitability plus project in 2010. The results are there for all to see and have exceeded the forecast effects. The raw juice distraction has been stabilised and

kept to a low level, the ethanol factory benefits from a more consistent raw juice quality, the pulp press units are supplied more consistently and, encouragingly, we have been able to reduce the use of energy considerably. Energy savings alone have enabled this measure to make more than half a million over the course of the past two campaigns. Annual savings totalling EUR 200,000 were forecast. n

Udo Harten Director Klein Wanzleben

Anne-Katrin Rohde Senior Manager Operational Excellence (OPEX)

Lithuania: ‘Golden Beet’ for the best Sugar yield trends of the top 20 per cent of Nordzucker farmers in tonnes of sugar per hectare

20.0 15.9

15.3

16.6

12.9

2009/2010 2010/2011

From the left: Arūnas Bielskis, Rimantas Garuckas and Algimantas Kizanskas.

When it comes to producing sugar beet, Rimantas Garuckas, a farmer in the city of Radviliškis, has the golden touch. The Nordic Sugar farmer and two of his colleagues from Lithuania have been awarded the prized Golden Beet for outstanding achievements in beet cultivation. Arūnas Bielskis of Baltic Agro UAB handed over the weighty, golden glass sculpture during this year’s Golden Beet industry meeting in Kaunas, Lithuania’s second city. Since 2006, the Golden Beet has

2011/2012 2017/2018 Target

2020 Target

20 · 20 · 20 makes progress: In 2011, the top 20 per cent of Nordzucker beet farmers by yield achieved an average of 15.9 tonnes of sugar per hectare of sugar beet.

been awarded each year to particularly well-performing beet farmers. Over the past ten years, the Lithuanian Nordic Sugar farmers have managed to almost double their sugar beet yields. The farmers’ cooperation with Nordic Sugar’s cultivation advisers, research institutions and manufacturers of seed, fertiliser and plant protection products has contributed significantly to this. In order to continue this productive exchange and continuously encourage further progress, the beet

farmers meet once a year at the invitation of Nordic Sugar and other agricultural businesses, outside of professional meetings and in a more informal setting for the ‘Golden Beet’ event. n

Saulius Mozeris Agricultural Manager, Nordic Sugar Kédainiai

Akzente 02/12

BEET

SERIES: 20 · 20 · 20

The required technology for row fertilisation and autumn strip tilling is already available.

Dreams of the future: The even distribution of the beet over the field (equalspace narrow-row method) will improve the efficiency of land use.

Cultivation trials Focusing on quick success and future questions With the 20 · 20 · 20 project – where the 20 per cent of the best beet farmers are expected to be harvesting 20 tonnes of sugar per hectare by the year 2020 – Nord zucker is taking various different approaches to achieve its goal. In addition to intensifying cultivation advice, cultivation trials are also a major part of increasing yields. Testing suitability for practical use Some of these are trials that rapidly find their way into practical use, such as row fertilisation during sowing or the ‘autumn

strip trilling’ technique. While technology is already available for row fertilisation, existing technology from spring strip tilling was used for the autumn strip tilling process. It is currently being tested at various trial sites in Northern Germany as part of a project. Towards the future: Beet planted under film and equal-space narrow-row method Other cultivation trials are more oriented towards the future. These include planting the beet under film or fleece, planting pre-

New cultivation methods designed to increase yields are a focus of cultivation trials: some of these methods may yet find their way into practical use quickly.

grown beet and using the ‘equal-space narrow-row’ method. With this method, the space between the rows is reduced to 30 centimetres and the distance between the beet in the row is increased to 30 centimetres so that each beet is given the same amount of room to grow in. n

Dr. Andreas Windt Manager Agricultural Management

Aktuell BEET

All signs point towards a good beet year Promising start after earlier sowing throughout the Group

Varying emergence conditions In most locations, rainfall following sowing ensured sufficient emergence on the fields, but this occurred later than in the previous year. Overwhelmingly cool temperatures in early to mid-April allowed only average development of the beet. Frosts around Easter and mid-April attacked the young plants and resulted in resowing on certain fields. During the rest of April and May, there was a lack of rainfall in various regions and temperatures varied greatly, but this did not negatively impact beet development in any significant measure. Beet rows close in early Row closure is an important indicator for the state of the beet, and this had already been observed on the first crops by the end of May. By mid-June, the beet development trends indicated overwhelmingly that 2012 would be a good year for beet. By contrast, crops are developing at a more average rate in Finland and Lithuania. The amount and distribution of rainfall in June/July and the subsequent control of leaf diseases is crucial for the beet’s further development. If these influences turn out to be favourable, Nordzucker can expect above-average harvests. n

Comparison of sowing dates by country Nordzucker Group, 2012 and average, 2007 – 2011 26/03

07/04

Germany Denmark Sweden

25/03

08/04 07/05

12/04

30/03

Finland

20/04

12/05

Lithuania 10/04

22/04

Poland Slovakia

22/03

10/04 04/04

29 05 15 22 March March March April 2012

12 April

19 April

26 April

03 May

10 May

17 May

Average 2007 – 2011

The majority of Nordzucker beet farmers across the Group started sowing early in the 2012 beet year. Much like the previous year, the early start of the vegetation stage ensured promising starting conditions, thus making long growth and high beet yields possible. The beet in Germany, Denmark, Sweden and Slovakia was sown around 14 days earlier than the average of the past five years. The comparison over several years shows an example of how beet sowing has developed in Germany. It is apparent that sowing in 2012 was timed along the same lines as in 2011. In other words: early and compact! With the exceptions of Lithuania and Finland, this statement also applies to the other countries of the Nordzucker Group.

Sowing trend in Germany, 2009 – 2012 as percentage of land under cultivation 100 80 2012

2011

24. March

31. March

2009

2010

60 40 20

Dr. Ulf Wegener Vice President Agricultural Sourcing Strategies

0 17. March

07. April

14. April

21. April

Akzente 02/12

MARKET AND CLIENTS

SPOTLIGHT ON THE MARKET

Loading sugar in São José do Rio Preto in the state of São Paulo: Sugar is loaded from big bags into hopper cars.

High prices have a long reach Global sugar market in 2012/2013: USDA presents initial estimate for the new financial year In mid-May, the US Department of Agriculture traditionally presents its first estimate for the supply and demand situation on the most important agricultural markets in the new 2012/2013 financial year. This includes the global sugar market. The USDA’s estimates are used by almost all market players as a basis for their own market estimates and positioning, and so they have a direct influence on the development of stock exchange prices.

Production growth of two per cent expected According to the USDA’s May report, global sugar production will rise in the coming financial year (October/September) to 174 million tonnes, representing production growth of two per cent com-

pared to the 171 million tonnes produced in the financial year 2011/2012. The USDA expects almost all main production regions to increase their production. In the 2012/2013 financial year, it continues to hold true that ‘high prices have a long reach’. The high prices of the past two years have led to incentives in production worldwide, therefore also resulting in more arable land usage and an increase in cultivation intensity (increased use of fertiliser and plant protection agents). As a reminder, the prices quoted on the London Stock Exchange in July 2011 reached an alltime high of USD 876 per tonne of sugar. Important cultivation countries increase production Forecasts for Brazil assume that more sugar cane will be allocated from bioethanol

production to sugar production, thereby increasing the production volume to 37.8 million tonnes (2011/2012: 36.2 / +4.4 per cent). In India, the expansion of land used for sugar cane means that an increase in sugar production to 29.7 million tonnes (28.8 / +3.3 per cent) is expected. The cause of the land expansion is the higher profitability in comparison to wheat and maize. Increases in production are also expected for Thailand (2012/2013: 10.8 million tonnes; 2011/2012: 10.4 / +3.8 per cent), China (13.1; 12.3 / +6.5 per cent) and Australia (4.5; 3.9 / +15.3 per cent). European Union: Yields below previous year For the EU, the USDA expects the harvest in 2012 to remain below the previous year’s record value as a result of average yields, and that it will therefore drop by

MARKET AND CLIENTS

Sugar price trends on the global market

Sugar production and consumption around the world

January 2010 – June 2012 (monthly averages)

2002 – 2013

900

180

160

140

120

White sugar $/t

800 700 600

100 80

500

-1

-6

200 Oct 2010

Feb 2011

Jun 2011

Source: Reuters, London Nr. 5

Oct 2011

Feb 2012

Jun 2012

0 -10 -20 -30

02/03

300

Jun 2010

White sugar €/t

Feb 2010

-11

60 400

-3

04/05

06/07

Changes in stocks against the previous year (in millions of tonnes, right-hand axis)

08/09

10/11

12/13

Consumption (in millions of tonnes, left-hand axis) Production (in millions of tonnes, left-hand axis)

Sources: USDA; F.O. LICHT and own calculations

In 2011, sugar prices reached an all-time high. Since then, the build-up of stocks and high harvest expectations for the new financial year have caused prices to decline significantly.

1.7 million tonnes to around 15.8 million tonnes. This would mean a decline of 10 per cent against the previous year. In spite of the decline, the expected elevated stocks at the beginning of the new financial year (3.2 million tonnes according to the last estimate from the European Commission) mean that the extraordinary measures taken in the p revious year, such as the approval of non-quota sugar, are no longer necessary from a current perspective. Consumption continues to rise The global demand for sugar will continue to rise in 2012/2013. The USDA expects 163 million tonnes to be consumed worldwide, around two per cent more than in the previous year. The largest part of this growth in consumption will be attributable – as in recent years – to India (2012/2013:

26.5 million tonnes; 2011/2012: 25.5 / +4 per cent) and China (14.9; 14.4 / +3.4 per cent). There is, however, the need to state that a decline in global economic growth due to a return of the financial crisis may well also lead to a more restrained rise in sugar consumption. Compared to cereals, the demand for sugar is more susceptible to price changes. Increasing stocks In spite of the expected continued growth in consumption, global production, driven by the higher prices of the previous year, will exceed consumption by around 10 million tonnes. Accordingly, stocks will grow even more in 2012/2013 by around five per cent year on year to around 33 million tonnes (2011/2012: 32 million tonnes).

Pressure on prices The build-up of stocks commenced in 2011/2012 and the expectations of a large harvest in the coming financial year have already caused a heavy decline in the previously high global market prices. The price for raw sugar on the global market fell by 18 per cent between January and May 2012, from USD 521 per tonne to USD 428 per tonne. A similar trend as on the global markets will come about in the EU, albeit some time later. n

Dr. Thordis Möller Economics

Akzente 02/12

MARKET AND CLIENTS

At home near Lübeck since 1899: Schwartauer Werke.

Customer profile

Sweet spread with a traditional touch Schwartauer Werke producing since 1899 The Germans enjoy eating jams, or as they say correctly, “Konfitüre”. Despite the competition from chocolate hazelnut spreads, honey and peanut butter, around 155,000 tonnes of jam are sold in Germany each year. A large proportion of what is consumed in

Germany is placed in jars in the town of Bad Schwartau, near Lübeck. These jars might have a rustic feel to them, they might be slender, or they may even be curvy. This is where the market leader, Schwartauer Werke, has its headquarters.

The three factories at Schwartauer Werke, which was founded in 1899, are just a few hundred metres from the small town’s railway station. A number of building complexes – red brick buildings, an old villa and a modern building – collectively form the headquarters of the medium-sized family run business. Here Schwartauer Werke manufactures its jam and manages its business. The research and development department is housed together with the marketing and quality assurance departments in a bright, former marzipan factory that has been converted. This is where I met Dr Sebastian Portius. He is the managing director for research and development and quality assurance. “The fruit that we mainly use is, and will always be, the strawberry. Around 40 per cent of the jam consumed in Germany is strawberry jam, or jam that combine strawberry with another fruit, say grapefruit or raspberry,” explains Sebastian Portius. Ensuring quality on site The company procures the strawberries from selected farmers in different regions, mainly Poland and Germany. A critical look is already taken at the selection of suitable strawberry varieties during the purchasing process. There are hundreds of different types.

The fruit scout travels to the various farms and checks the quality of each fruit variety on site.

Apricot and elderflower jam from Schwartau. According to the German ‘Konfitüre’ Regulation, only those products manufactured from citrus fruits can be described as marmalade.

MARKET AND CLIENTS

Germany’s favourite jam fruit is the strawberry.

“So that we can keep an overview here, we have an expert, a ‘fruit scout’ on location. He travels to the farms and selects the varieties that are especially aromatic,” says Sebastian Portius, explaining the company’s purchasing philosophy. The strawberries are then delivered fresh to Bad Schwartau and frozen there. The strawberries from Poland are frozen locally and delivered to Schleswig-Holstein in their frozen state. “This enables the strawberries to be processed into jam while they are at their best quality, when they have their ideal ripeness,” says Sebastian Portius. Around 300 different flavours define the taste of a strawberry. “For our products, we use strawberries that are more full-bodied in taste than those you can buy at the grocer’s. This works because the strawberries are picked while they are ripe, frozen directly and do not spend several days being transported for sale. Our product developers use the different

strawberry varieties to compose the taste of our jam. This is how we can offer our consistently high quality,” explains Sebastian Portius. 700,000 jars a day Today, around 700,000 jars are filled with jam in Bad Schwartau every day. To make good jam, you need sugar, just like when you’re preparing strawberries, raspberries or blueberries in your own kitchen. It doesn’t just sweeten the spread, it also preserves the fruit. Several silo trucks of sugar are processed each day. The demand for jam remains consistent throughout the year, says Portius, unless Germans harvest particularly large amounts of fruit in their private gardens. Statistics say that 150,000 tonnes of jam are prepared in German kitchens. “When you look at it that way, Germany’s housewives pose some real competition for us,” says Portius with a grin. n

SCHWARTAUER WERKE GmbH & Co. KGaA Manufacturer of jam and fruit spreads, muesli bars and cooled fruit drinks l

1 899: Founded as ‘Chemische Fabrik’, a company that produced artificial honey and plum compote among other things

1 904: Production starts on jams and marmalades

1 907: Sugar refinery founded (shut down around the end of the First World War)

1 927: Group of companies merges to become ‘Schwartauer Werke AG’

R evenues in 2011: around EUR 330 million

Nina Tatter Corporate Communications

Akzente 02/12

Blueberry and blackberry compote with cinnamon cream

Ingredients for the blueberry and blackberry compote: 450 g Blueberries 300 g Blackberries (either fresh or frozen) 180 g SweetFamily 1-2-3 Rote Grütze

For the cinnamon cream: 250 g Cream 1 pack cream stabiliser 4 – 5 tsp SweetFamily Zuckerträume cinnamon

Preparation: 1. if using fresh fruit, wash it and remove the stalks. Alternatively, defrost frozen fruit. Mix half of the prepared fruits with SweetFamily 1-2-3 Rote Grütze and liquidise for 15 seconds until finely puréed. Then mix in the rest of the fruits and allow to sit for 15 minutes. 2. Whip the cream, cream stabiliser and SweetFamily Zuckerträume cinnamon flavouring until firm. 3. Pour the blueberry and blackberry compote into small bowls and place a spoonful of cream on top. Decorate with a little SweetFamily Zuckerträume cinnamon flavouring and small wafers.

Preparation time: 25 minutes

Nutritional values per portion: approx. 463 kcal 3.2 g protein 63.9 g carbohydrates