Nordzucker Interim Report 3 Months 2016_17 EN

Interim report Financial Year 2016/17 3 M o n t h s / 1 M a r c h to 3 1 M ay 2 0 1 6

2

N o r d z u c k e r I n t e r i m R e p o r t 3 M o n t h s 2016/2017

N o r d z u c k e r I n t e r i m R e p o r t 3 M o n t h s 2016/2017

K e y Fi g u r e s

Content

Three Months 2016/17

Hi g h li g h t s o f t h e first three months 2016/17

4

O P E R AT I N G B U S I N E S S 1/3/2016 – 31/5/2016

1/3/2015 – 31/5/2015

Change

Revenues

EUR m

398

374

24

EBIT

EUR m

23

– 7

30

Net income for the period

EUR m

16

– 7

23

Cash flow from operating activities

EUR m

155

99

56

Investment in property, plant and equipment and intangible assets

EUR m

15

8

7

Letter from the executive Board

7 E a r n i n g s a n d f i n a n ci a l ­P o s i t i o n a n d n e t a s s e t s

10 C o n s o li d a t e d i n c o m e s tat e m e n t

10

BAL ANCE SHEET FIGURES 31/5/2016

31/5/2015

Change

Total assets

EUR m

1,979

2,026

– 47

Shareholders’ equity

EUR m

1,297

1,276

21

%

66

63

3

Debt capital

EUR m

682

750

– 68

Financial liabilities

EUR m

12

8

4

Cash and cash equivalents

EUR m

317

131

186

Net debt1

EUR m

305

123

182

Equity ratio

1 Cash and cash equivalents less financial liabilities

C o n s o li d a t e d s t a t e m e n t o f comprehensive income

11 C o n s o li d a t e d c a s h f l o w s tat e m e n t

12 C o n s o li d a t e d b a l a n c e s h e e t

14 C o n s o li d a t e d s t a t e m e n t of Changes in Shareholders’ equity

STRUCTURAL FIGURES 1/3/2016 – 31/5/2016

1/3/2015 – 31/5/2015

Change

13

13

–

Sugar refineries

3

3

–

Liquid sugar plants

2

2

–

Bioethanol plants

1

1

–

Sugar plants

15 Fi n a n ci a l c a l e n d a r

Revenues and earnings up

In the first three months of the 2016/2017 financial year, Nordzucker generated revenues of EUR 398.0 million. This was EUR 24.2 million higher than in the same period the previous year. Higher sales volumes of quota sugar and non-quota sugar, as well as a slight recovery in the price of quota sugar, were responsible for the revenue growth. Production costs fell at the same time, enabling a profit of EUR 16.3 million for the period, in contrast to the loss of EUR 6.9 million reported for the same period a year ago.

Good harvest expected

Sugar beet sowing was slightly delayed in some regions. Thereafter the beet developed well almost everywhere. Warm weather in May and June was good for growth, which meant that the rows closed during the month of June in all growing areas. From the current perspective the conditions for 2016 are good and we are expecting a good harvest.

S u g a r p r i c e s s ta b i l i z e d

World market prices for sugar continue to recover. A slight increase in the sugar price was also observed in Europe. The expectation is that this trend will continue, since the high sugar stocks have been gradually reduced and in the current sugar marketing year further imports can only be obtained at significantly higher prices. On the other hand, the land given over to beet cultivation will increase again, having been reduced considerably last year. All producers in the EU are preparing for the time following the expiry of the sugar market regime and the intense competition for market share this will continue to bring.

3

4

N o r dz u c k e r I n t e r i m R e p o r t 3 M o n t h s 2 016 / 2 017

N o r d z u c k e r I n t e r i m R e p o r t 3 M o n t h s 2016/2017

THE EXECUTIVE BOARD OF NORDZUCKER AG

Dr Michael Noth

Hartwig Fuchs (Chief Executive Officer)

Axel Aumüller

Dr Lars Gorissen

Dear shareholders, As expected, we were able to close the first quarter of the financial year 2016/2017 with a profit.

Last year’s reductions in land under beet in the EU and global sugar production below the level of ­consumption caused the price of quota sugar to recover slightly. We increased sugar sales successfully, reporting strong year-on-year ­revenue growth of six per cent. At the same time we were able to achieve a slight reduction in costs. Overall, this resulted in net income for the period of EUR 16.3 million. This represents a substantial i­mprovement on last year and confirms our forecast for the full year. We are expecting substantially positive earnings that should be much better than last year. Contributions will come mainly from improved market conditions, lower energy prices and additional savings from the FORCE programme.

The current financial year 2016/2017 is the last full year governed by the old sugar market regime. ­Production volumes in the EU are predicted to increase thereafter, as many sugar producers try to maximize their capacity use. This will make it difficult for prices to continue their strong upward trend.

We have been preparing for these new market conditions for a long time. Nordzucker has a solid capital structure and is becoming much faster and more flexible thanks to its cost-cutting and efficiency programmes. They are accompanied by customer orientation, practised sustainability across the entire value chain and a genuine partnership with our beet farmers, featuring attractive contract options. We are in a position to seize our future opportunities.

The company’s continued development and future success are closely linked with its growth plans. In fact, the big companies in the sugar industry keep getting bigger – at a global level more than in the EU – because in the sugar business, size means greater efficiency and so cost leadership. We are paying very close attention to the consolidation process in the EU and in the growth markets outside the EU, such as the sub-Saharan region of Africa and Central and South America. We will exploit growth opportunities that arise, if the conditions are right.

The reliable and confident support that we always receive from you, our shareholders, is the basis for our future success.

Yours sincerely, Nordzucker AG The Executive Board

Hartwig Fuchs

Axel Aumüller

Dr Lars Gorissen

Dr Michael Noth

5

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N o r d z u c k e r I n t e r i m R e p o r t 3 M o n t h s 2016/2017

N o r d z u c k e r I n t e r i m R e p o r t 3 M o n t h s 2016/2017

Si t e s i n E u r o p e

E a r n i n g s a n d f i n a n ci a l position and net assets

Group H e a d q u a rters D

1

Braunschweig

R egi o n a l H e a d Office DK

2

Copenhagen

S u g a r Pl a nts a nd refineries D

DK

S

FIN

3

Clauen

4

Nordstemmen

5

Uelzen

6

Klein Wanzleben

7

Schladen

8

Nakskov

9

Nykøbing

10

Arlöv

11

Örtofta

12

Porkkala

13

Säkylä

LT

14

Kėdainiai

PL

15

Chełmża

16

Opalenica

SK

17

Trenč ianska Teplá

D

18

Liquid sugar plant Groß Munzel

19

Liquid sugar plant Nordstemmen

sugar plants – n o n - c o n s o l i dat e d M in o rit y st a k e CZ

20

Dobrovice

21

Ceské Meziříčí

General remarks 29

The quarterly financial reports as of 31 May 2016 for ­Nordzucker AG (Küchenstrasse 9, 38100 Braunschweig, ­Germany) have been prepared in accordance with the International ­Financial Reporting Standards (IFRS) adopted and published by the International Accounting Standards Board (IASB) and the IFRS Interpretations Committee (IFRS IC) as applicable in the European Union (EU-IFRS). The financial statements c­ omply fully with EU-IFRS and give a true and fair view of the net assets, financial and earnings position of ­Nordzucker AG and its consolidated subsidiaries, joint ventures and a­ ssociated companies (hereinafter known as ­“Nordzucker Group” or “Group”).

13 12

30

28

No changes have been made to the accounting policies used for the preparation of the annual IFRS consolidated financial statements as of 29 February 2016. These can be found in the Annual Report 2015/2016 (www.nordzucker.de).

26

2 24

31

11

14

10 23

8

9

1

6 22

27

5 18 25

4 19

3

21 17

o ther l o c a ti o ns D

22

Bioethanol plant, Klein Wanzleben

S

23

Köpingebro (Fibrex)

DK

24

NP Sweet, Copenhagen

B

25

Office Brussels

Revenues and earnings

In the first three months of the financial year 2016/2017 the Nordzucker Group generated revenues of EUR 398.0 million, approximately 6 per cent more than in the previous year.

Higher sales volumes of quota sugar and non-quota sugar, as well as a slight recovery in the price of quota sugar, were responsible for the revenue growth, whereas revenues for bioethanol and by-products were down.

s a les o ffices LV

26

Riga

LT

27

Vilnius

EE

28

Tallinn

IS

29

Reykjavik

NO

30

Oslo

IE

31

Dublin

GR

32

Athens

The operating result (EBIT) of the Nordzucker Group totalled EUR 22.9 million in the first three months of the 2016/2017 financial year, compared with EUR –6.7 million in the same period of the previous year.

The production of sugar is a seasonal business. The production phase, from the beginning of September until January, is entirely in the second half of the financial year. This should be taken into consideration when interpreting the first quarter earnings.

16

20

At EUR 45.5 million, personnel expenses were higher than last year (EUR 42.6 million). Depreciation, amortization and impairment of EUR 18.3 million was roughly stable (prior-year period: EUR 18.4 million).

Seasonal sugar production

15

7

Administrative expenses came to EUR 19.0 million, also slightly higher than the figure of EUR 18.2 million in the same period of the previous year. Other income significantly decreased to EUR 4.1 million (prior-year period: EUR 6.2 million). Other expenses were also much lower at EUR 2.8 million (prior-year period: EUR 8.9 million).

32

Production costs came to EUR 319.8 million, slightly below the figure of EUR 322.7 million in the same period of the previous year. Last year’s sales also included sugar from prior periods with higher production costs.

Sales costs increased slightly due to higher sales volumes to approx. EUR 37.6 million (prior-year period: EUR 37.0 million).

Consolidated R evenues

Consolidated E B I T

Euro m

Euro m

450 400

30 374

398

25

350

20

300

15

250

10

200

5

150

0

100

–5

50

–10

0

–15 3 months 2015/16

3 months 2016/17

23

–7 3 months 2015/16

3 months 2016/17

7

8

N o r d z u c k e r I n t e r i m R e p o r t 3 M o n t h s 2016/2017

Financial income of EUR 0.2 million was roughly equal to the previous year’s figure of EUR 0.1 million. Financial expenses were also more or less unchanged (EUR 2.0 million compared with EUR 1.9 million).

In the first three months of the financial year 2016/2017 the Nordzucker Group reported a profit before minority interests of EUR 16.3 million, in contrast with the same period a year ago, which saw net income for the period of EUR –6.9 million.

The main reasons for the positive earnings were higher sales volumes, slightly higher prices for quota sugar and lower costs.

N o r d z u c k e r I n t e r i m R e p o r t 3 M o n t h s 2016/2017

Outlook

C ash flow and bal ance sheet

Cash flow from operating activities of EUR 155.0 million in the first three months of the financial year 2016/2017 was significantly higher than the previous year’s figure (EUR 99.2 million). This increase was largely due to a rise of EUR 29.5 million in pre-tax earnings compared with the previous year.

Net cash flow from investing activities came to EUR –14.7 million, slightly higher than the EUR –13.4 million of the same period last year.

Cash flow from financing activities came to EUR 4.5 million (prior-year period: EUR 0 million) and consisted solely of ­proceeds from borrowing.

Total consolidated assets came to EUR 1,978.6 million as of the reporting date of 31/5/2016 (31/5/2015: EUR 2,025.8 million).

Property, plant and equipment declined by EUR 11.4 million to EUR 830.1 million and inventories fell sharply by EUR 216.3 million to EUR 578.4 million.

The decline in total assets was mirrored on the liabilities side by a fall of EUR 88.0 million in trade payables to EUR 137.4 million.

Cash and cash equivalents exceeded financial liabilities by EUR 304.7 million at the end of the reporting period as of 31/5/2016. At the end of the same period in the previous year (31/5/2015), the excess amount was EUR 123.1 million.

Consoli date d Net

N E T D E B T (–) /

I ncome for the perio d

I N V E S T M E N T (+ )

G roup Balance sheet structure as of 3 1 May 2 0 1 6

Euro m

Euro m

Euro m

25

350

20

16

15

305

300

2,000 1,500

10

200

1,250

5

150

0

100

750

–5

50

500

0

250

–7

–15 3 months 2016/17

3 months 2015/16

45 %

66 %

29 %

19 %

1,000

123

– 50 3 months 2015/16

1,979

1,750

250

–10

1,979

3 months 2016/17

0

26 %

Assets

15 %

Equity & liabilities

Non-current assets

Equity

Inventories

Non-current liabilities

Other current assets

Current liabilities

The key figures for the Nordzucker Group for the first three months of the financial year 2016/2017 confirm the positive outlook for the full year 2016/2017 given at the end of the last financial year. World market prices for sugar continue to recover. A slight increase in the sugar price was also observed in Europe. The expectation is that this trend will continue, since the high sugar stocks have been gradually reduced and in the current sugar marketing year further imports can only be obtained at significantly higher prices. On the other hand, the land given over to beet cultivation will increase again, having been reduced considerably last year. All producers are still exposed to intense competition for market share in order to secure the best possible position for themselves when the sugar market regime expires in 2017.

Nordzucker is still expecting revenues for 2016/2017 to be slightly above the level of the financial year 2015/2016.

The slightly higher revenues, low energy prices and further savings from the FORCE programme should make it possible to achieve substantially higher earnings than in the previous year. The results for the first three months of the financial year 2016/2017 confirm this.

Forecasts for the following 2017/2018 financial year are virtually impossible. It covers the last seven months of the old quota system and the first five months without quotas.

Forecasts are very difficult to make given the considerable changes to the European sugar market, the lengths to which many producers are expected to go to increase market share and the high volatility of global sugar markets.

Massive upheaval may ensue, however, particularly in the transition period, which could put considerable pressure on Nordzucker’s earnings.

In the medium term, the European sugar market should develop more positively again, however. The high economic potential of sugar beet enables European sugar producers to supply their customers on competitive terms and, after a transitional period, the market will consolidate further.

Nordzucker is a strong provider in Europe, who can make use of these opportunities and is intensively preparing to do so.

The company is sufficiently well set up to play an active role in the market consolidation and to further expand its position in Europe. Its capital structure is so solid that the company can also strengthen its core business further by means of investments. Growth opportunities outside of Europe can also be considered. Nordzucker has successfully dealt with all of the changes in Europe to date, and has emerged from them even stronger. And the company will also continue this success in a world without sugar quotas.

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10

N o r d z u c k e r I n t e r i m R e p o r t 3 M o n t h s 2016/2017

N o r d z u c k e r I n t e r i m R e p o r t 3 M o n t h s 2016/2017

QUARTER LY Fi n a n ci a l S tat e m e n t s NO r d z u ck e r AG

C o n s o li d a t e d i n c o m e s t a t e m e n t

S tat e m e n t o f c a s h f lo w s

Nordzucker AG, Braunschweig, Germany, for the period from 1 March 2016 to 31 May 2016

Nordzucker AG, Braunschweig, Germany, for the period from 1 March 2016 to 31 May 2016

1/3/2016 – 31/5/2016

1/3/2015 – 31/5/2015

Change

1/3/2016 – 31/5/2016

1/3/2015 – 31/5/2015

398,010

373,801

24,209

Change

20,893

– 8,559

– 319,836

– 322,674

2,838

29,452

1,576

1,517

78,174

51,127

27,047

59

Depreciation, amortization and impairment/reversals of impairment of non-current assets

18,186

18,292

– 106

Sales costs

– 37,563

– 36,957

– 606

Change in provisions

– 6,160

– 2,469

– 3,691

Administrative expenses

– 18,959 4,054

– 18,202

– 757

Change in inventories

176,236

192,888

– 16,652

6,217

– 2,163

Change in trade receivables

– 25,987

– 11,877

Other expenses

– 14,110

– 2,819

– 8,894

6,075

Change in trade payables

– 45,819

– 101,896

Operating result (EBIT)

56,077

22,887

– 6,709

29,596

11,520

12,126

– 606

186

149

37

809

– 22

831

– 2,021

– 1,897

– 124

Other non-cash expenses/income

– 121

45

– 166

– 159

– 102

– 57

Interest received in the financial year

6,721

76

6,645

Earnings before tax

20,893

– 8,559

29,452

Interest paid in the financial year

– 750

– 561

– 189

Income taxes

– 4,565

1,701

– 6,266

Result of companies accounted for using the equity method

159

102

57

Net income for the period

16,328

– 6,858

23,186

Taxes paid in the financial year

– 2,216

– 444

– 1,772

155,047

99,218

55,829

79

57

22

– 14,394

– 8,098

– 6,296

– 411

– 273

– 138

0

2

– 2

In EUR thousands Revenues Production costs Gross profit

Other income

Financial income Financial expenses Result from companies accounted for using the equity method

of which attributable to non-controlling interests of which attributable to shareholders of the parent company

309

– 66

375

16,019

– 6,792

22,811

In EUR thousands Earnings before tax Interest and similar income/expenses

Change in other operating assets/liabilities Gains/losses on disposal of non-current assets

Cash flow from operating activities Proceeds on disposal of property, plant and equipment Payments for investments in property, plant and equipment Payments for investments in intangible assets

S tat e m e n t o f c o m p r e h e n s i v e i n c o m e

Proceeds on disposal of financial assets Payments for investments in financial assets

0

– 5,133

5,133

– 14,726

– 13,445

– 1,281

4,534

13

4,521

0

– 1

1

Cash flow from financing activities

4,534

12

4,522

Changes in cash and cash equivalents

144,855

85,785

59,070

Cash and cash equivalents at the beginning of the period

171,781

44,989

126,792

– 2

10

– 12

316,634

130,784

185,850

Cash flow from investing activities 1/3/2016 – 31/5/2016

1/3/2015 – 31/5/2015

Change

16,328

– 6,858

23,186

Remeasurement of defined benefit plans

0

11,625

– 11,625

Deferred taxes on items of other comprehensive income not reclassified to the income statement

0

– 3,445

3,445

In EUR thousands Net income for the period

Other comprehensive income from items not reclassified to the income statement Exchange differences on translating foreign operations

0

8,180

– 8,180

911

1,460

– 549

1,842

1,971

– 129

Deferred taxes on items of other comprehensive income reclassified to the income statement

– 532

– 583

51

2,221

2,848

– 627

18,549

4,170

14,379

Consolidated comprehensive income after taxes of which attributable to non-controlling interests of which attributable to shareholders of the parent company

Loan repayments

Effect of foreign exchange rate changes

Net result of cash flow hedges

Other comprehensive income from items reclassified to the income statement

Proceeds from borrowing

307

– 66

373

18,242

4,236

14,006

Cash and cash equivalents at the end of the period

11

12

N o r d z u c k e r I n t e r i m R e p o r t 3 M o n t h s 2016/2017

N o r d z u c k e r I n t e r i m R e p o r t 3 M o n t h s 2016/2017

C o n s o li d a t e d s t a t e m e n t o f f i n a n ci a l p o s i t i o n as of 31 May 2016, Nordzucker AG, Braunschweig, Germany

ASSET S In EUR thousands

29/2/2016

31/5/2016

31/5/2015

Equit y and Liabilities In EUR thousands

NON-CURRENT ASSETS

Shareholders’ equity

Non-current assets

Subscribed capital

Intangible assets Property, plant and equipment Investment property

22,269

21,349

24,298

834,810

830,117

841,553

2,929

4,500

2,983

Financial investments Shares in companies accounted for using the equity method Other financial investments

Other assets

Retained earnings Other comprehensive income Equity attributable to shareholders of the parent company

7,307

7,148

7,599

23,906

23,907

23,931

Non-controlling interests

31/5/2015

123,651

123,651

123,651

127,035

127,035

127,035

1,046,339

1,062,364

1,028,812

– 57,844

– 55,621

– 45,355

1,239,181

1,257,429

1,234,143

39,186

39,495

41,570

1,278,367

1,296,924

1,275,713

221,834

222,769

208,878

50,874

49,289

34,693

31,213

31,055

31,530

887,021

900,364

0

0

0

Other provisions

1,432

2,383

6

Financial liabilities

7,147

7,119

7,380

1,432

2,383

6

Liabilities towards related parties

5,500

5,500

5,500

18

18

18

8,446

8,960

8,932

Non-current provisions and liabilities Provisions for pensions and similar obligations

Other financial liabilities Deferred taxes

31/5/2016

891,221 Receivables and other assets Financial assets

Capital reserves

29/2/2016

5,583

5,185

5,314

898,236

894,589

905,684

Other liabilities Deferred taxes

CURRENT ASSETS

83,066

85,142

87,268

376,885

378,797

352,669

Inventories Raw materials, consumables and supplies

57,346

56,742

52,435

Current provisions and liabilities

Work in progress

41,595

49,144

46,642

Provisions for pensions and similar obligations

11,521

10,597

11,291

654,988

472,481

695,605

Other provisions

45,100

41,664

63,404

753,929

578,367

794,682

Financial liabilities

261

4,797

261

18,233

19,761

13,953

Finished goods and merchandise Receivables and other assets Trade receivables

Current income tax liabilities 127,336

153,191

150,766

Receivables from related parties

914

160

93

Current income tax receivables

272

1,295

5,327

Financial assets

20,514

13,391

18,737

Other assets

38,156

20,980

187,192

189,017

Cash and cash equivalents Current assets Assets held for sale

183,202

137,405

225,452

Liabilities towards related parties

32,384

30,828

38,259

Other financial liabilities

19,230

9,714

5,595

Other liabilities

47,471

48,120

39,213

18,218

357,402

302,886

397,428

193,141

2,012,654

1,978,607

2,025,810

171,781

316,634

130,784

1,112,902

1,084,018

1,118,607

1,516

0

1,519

1,114,418

1,084,018

1,120,126

2,012,654

1,978,607

2,025,810

Trade payables

13

14

N o r d z u c k e r I n t e r i m R e p o r t 3 M o n t h s 2016/2017

N o r d z u c k e r I n t e r i m R e p o r t 3 M o n t h s 2016/2017

C o n s o li d a t e d s t a t e m e n t o f c h a n g e s

Fi n a n ci a l C a l e n d a r

in shareholders’ equity Nordzucker AG, Braunschweig, Germany

In EUR thousands

Subscribed capital

Capital reserve

As of 1/3/2015

123,651

127,035

Net income for the period

Other Retained comprehensive income earnings 1,035,604

– 56,383

– 6,792

Other comprehensive income Consolidated comprehensive income

– 6,792

Equity attributable Nonto shareholders of controlling the parent company interests

14 October 2016 Publication of the Interim Report for the first six months of 2016/2017 Total equity

1,229,907

41,636

1,271,543

– 6,792

– 66

– 6,858

11,028

11,028

0

11,028

11,028

4,236

– 66

4,170

Dividend payment

0

0

0

0

Other

0

0

0

0

As of 31/5/2015

123,651

127,035

1,028,812

– 45,355

1,234,143

41,570

1,275,713

As of 1/3/2016

123,651

127,035

1,046,339

– 57,844

1,239,181

39,186

1,278,367

16,019

309

16,328

2,223

2,223

– 2

2,221

2,223

Net income for the period

16,019

Other comprehensive income Consolidated comprehensive income

18,242

307

18,549

Dividend payment

0

0

0

0

Other

6

6

2

8

1,257,429

39,495

1,296,924

As of 31/5/2016

16,019

123,651

127,035

1,062,364

– 55,621

13 January 2017 Publication of the Interim Report for the first nine months of 2016/2017

online P ublications The following publications can be downloaded from www.nordzucker.de > Annual Reports and Interim Reports > Declaration of compliance > Letter to shareholders Subscribe to the Interim Report at www.nordzucker.de

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Nordzucker AG KĂźchenstrasse 9 38100 Braunschweig Telephone: +49 (0) 531 2411-0 Fax: +49 (0) 531 2411-100 info@nordzucker.de www.nordzucker.de Corporate Communications Christian Kionka Telephone: +49 (0) 531 2411-173 pr@nordzucker.de Investor Relations Bianca Deppe-Leickel Telephone: +49 (0) 531 2411-335 ir@nordzucker.de Shares register Nicole Riedel-Elias Telephone: +49 (0) 531 2411-163 aktien@nordzucker.de

Printed copies of this Interim Report for the Nordzucker Group are also available in German.

Alternatively, the report is available online in German or English and can be downloaded as a PDF at www.nordzucker.de from the Download Centre.