Interim Report Nordzucker AG Three Months 2015/2016 - July 2015

FINANCIAL YEAR 2015/2016 3 M O N T H S / 1 M A R C H TO 3 1 M AY 2 0 1 5

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 2015/2016

Key figures three months 2015/2016

O p e r at i n g b u s i n e s s 1/3/2015 – 31/5/2015

1/3/2014 – 31/5/2014

Change

Revenues

EUR m

374

501

– 127

EBIT

EUR m

– 7

39

– 46

Net income

EUR m

– 7

24

– 31

Cash flow from operating activities

EUR m

99

– 17

116

Investment in property, plant and equipment and intangible assets

EUR m

8

20

– 12

31/5/2015

31/5/2014

Change

B a l a n c e s h e e t r at i o

Total assets

EUR m

2,026

2,048

– 22

Equity

EUR m

1,276

1,395

– 119

Equity ratio

%

63

68

– 5

Debt capital

EUR m

750

653

97

Financial liabilities

EUR m

8

8

0

Cash and cash equivalents

EUR m

131

25

106

Net debt (Cash and cash equivalents less financial liabilities)

EUR m

– 123

– 17

– 106

1/3/2015 – 31/5/2015

1/3/2014 – 31/5/2014

Change

Sugar plants

5

5

–

Sugar refineries

2

2

–

Sugar plants

5

5

–

Liquid sugar plants

2

2

–

Bioethanol plants

1

1

–

Sugar plants

3

3

–

Sugar refineries

1

1

–

Structure figures

Northern Europe

Central Europe

Eastern Europe

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 2015/2016

Content

Highlights of the first three months 2015/2016

5

Q ua r t e r ly r e s u lt / Co u r s e o f b u s i n e s s

7

In the first three months of the 2015/2016 financial year, Nordzucker generated revenues of EUR 373.8 million. This was again well below the revenues of EUR 500.8 million for the same period in the previous year.

The group reported a loss for the period of EUR 6.9 million, largely due to lower prices for quota sugar.

Earnings and financial position and net assets

Average har vest expected

Letter from the executive Board

10 C o n s o l i dat e d i n c o m e s tat e m e n t

10 C o n s o l i dat e d s tat e m e n t o f comprehensive income

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

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

14 C o n s o l i dat e d s tat e m e n t of changes in shareholders’ equity

15 Financial c alendar

Sowing largely began early in the Group this year, but the subsequent weather conditions meant that in many regions it went on for a long time. As a result, the initial growing conditions were not as ideal as in the previous year. Around 4,000 hectares in Germany had to be resown due to siltation. Thereafter, the temperatures in almost all regions were too low, delaying the development of the young beet. Overall, the harvest is expected to be below average, albeit with large regional variation.

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4

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 2015/2016

Dr Lars Gorissen Dr Michael Noth

Axel Aumüller Hartwig Fuchs (Chief Executive Officer)

Mats Liljestam

the e xeCu ti v e Boa rd of nordzuCKer ag

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 2015/2016

dear sharehoLders, the steep fall in eu sugar prices in the previous 15 months led to a fall in revenue for the first quarter of our financial year of around 25 per cent and was responsible for a loss of eur 6.9 million for the period. the reduction in cultivation areas, the scaled-back harvest predictions in europe and the stabilised pricing level with initial downward tendencies in some countries in the eu, will only have a limited impact on the current financial year. we therefore confirm our forecast that a positive result at the end of the financial year is unlikely. in the medium term, however, we do expect prices to recover, both in europe and on the global markets. in addition, we expect global sugar production to initially fall below the volume demanded, reducing stocks and thus having a corresponding effect on prices. nevertheless, the rise in prices will be limited by the increasing intensity of the competition on the eu sugar market. the market situation remains challenging, a situation we expect to continue in the 2016/17 financial year. we do, however, intend to address these challenges with an extensive package of measures: included among these is the forCe efficiency programme, with which we want to save at least eur 50 million a year, and the package includes our targets as part of the 20:20:20 vision as well as the Change project, with which we want to achieve a change in thinking regarding market and customer orientation. we are continuing to invest sustainably in our plants and a large proportion of these investments can be allotted to profitable expenses, which will secure us an improved cost basis for production in the future. we are in a financially strong position and possess the drive and ambition to utilize this phase for the sustainable realignment of our company. yours sincerely, nordzucker ag the executive Board

hartwig fuchs

mats Liljestam

axel aum端ller

dr. Lars gorissen

dr. michael noth

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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 2015/2016

Sites in Europe

Group H e a d q u a rter s D

1

Braunschweig

R egi o n a l H e a d O f f ice DK

2

Copenhagen

S u g a r P l a nt s a n d re f inerie s 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

Kèdainiai

PL

15

Chełmża

16

Opalenica

SK

17

Trenč ianska Teplá

D

18

Liquid sugar plant Groß Munzel

19

Liquid sugar plant Nordstemmen

s u g a r p l a nts – n o n - c o ns o lid a ted M in o rit y s t a k e CZ

20

Dobrovice

21

Ceské Meziříčí

29

13 12

30

28

26

2 24

31

11

14

10 23

8

9

1

6 22

27

5 18 25

4 19

3

15

16

7

20

21 17

o ther l o c a ti o n s D

22

Bioethanol plant, Klein Wanzleben

S

23

Köpingebro (Fibrex)

DK

24

NP Sweet, Copenhagen

B

25

Office Brussels

s a l e s o f f ice s LV

26

Riga

LT

27

Vilnius

EE

28

Tallinn

IS

29

Reykjavik

NO

30

Oslo

IE

31

Dublin

GR

32

Athens

32

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 2015/2016

Earnings and financial position and net assets

General remarks

Revenues and earnings

The quarterly financial reports as of 31 May 2015 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 comply 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 associated companies (hereinafter known as “Nordzucker Group” or “Group”).

In the first three months of the financial year 2015/2016 the Nordzucker Group generated revenues of EUR 373.8 million, approximately 25 per cent less than in the previous year. The fall in revenues was mainly due to lower prices for quota sugar, but also partly to declining sales volumes of sugar and non-quota sugar. Revenues from animal feed and bioethanol, however, were above the prior-year level.

No changes have been made to the accounting policies used for the preparation of the annual IFRS consolidated financial statements as of 28 February 2015. These can be found in the Annual Report 2014/2015 (www.nordzucker.de).

Seasonal sugar production

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.

Production costs came to EUR 322.7 million, compared with the figure of EUR 407.0 million in the same period of the previous year. However, this fall in production costs was only able to partly compensate for the drop in revenues.

Sales costs decreased slightly due to lower sales volumes to approx. EUR 37.0 million (prior-year period: EUR 37.9 million). Administrative expenses came to EUR 18.2 million, also down on the figure of EUR 20.3 million in the same period of the previous year. Other income decreased to EUR 6.2 million (prior-year period: EUR 8.4 million). Other expenses came to EUR 8.9 million (prior-year period: EUR 5.0 million).

At EUR 42.6 million, personnel expenses were down slightly on last year (EUR 44.8 million). Depreciation, amortization and impairment were also down on last year (EUR 18.4 million compared with EUR 20.0 million).

Con s olidated Rev en ues

Con s olidated E B IT

in EUR m

in EUR m

600 500

100

501

80 374

400

60

300

40

200

20

100

0

0

39 – 7

– 20 3 months 2014/2015

3 months 2015/16

3 months 2014/2015

3 months 2015/16

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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 2015/2016

The operating result (EBIT) of the Nordzucker Group totalled EUR – 6.7 million in the first three months of the 2015/2016 financial year, compared with EUR 39.0 million in the same period of the previous year.

Financial income of EUR 0.1 million was below the previous year’s figure of EUR 0.8 million. The Group was able to cut its financial expenses to EUR 1.9 million from EUR 4.3 million in the previous year.

In the first three months of the financial year 2015/2016 the Nordzucker Group reported a loss before minority interests of EUR 6.9 million, in contrast with the same period a year ago, which saw net income for the period of EUR 23.5 million. The steep fall in the price of quota and non-quota sugar was the main reason for the loss.

Con s olidated N et debt Consolidated net income

in EUR m

for the period

in EUR m

20 0

100

– 20

80

– 40

60

– 60

40

– 80

24

20

– 7

0 – 20

– 100 – 120 – 140

3 months 2014/2015

– 17

3 months 2015/2016

– 123 3 months 3 months 2014/2015 2015/2016

C ash flow and bal ance sheet

Cash flow from operating activities of EUR 99.2 million in the first three months of the financial year 2015/2016 was significantly higher than the previous year’s figure (EUR – 16.8 million). In contrast to the first quarter of 2014/2015 a large volume of liabilities to suppliers were not yet due for payment in the reporting period.

Gro up bal an c e s h e e t s t ru c t u r e a s o f 3 1 M ay 2 0 1 5

in EUR m

2,500 2,250 2,000

2,026

2,026

1,750 1,500

45 %

63 %

39 %

17 %

1,250 1,000 750 500 250 0

16 %

Assets

20 %

Equity & liabilities

Non-current assets

Equity

Inventories

Non-current liabilities

Other current assets

Current liabilities

Net cash flow from investing activities came to EUR – 13.4 million compared with EUR – 20.5 million for the same period last year. Lower cash outflows were largely due to lower capital expenditure on items of property, plant and equipment (EUR – 8.1 million compared with EUR – 20.1 million), although this was offset by higher payments for investments in financial assets (EUR – 5.1 million compared with EUR – 0.2 million).

There was virtually no cash flow from financing activities in the first three months of the financial year 2015/2016; in the same period of the previous year cash flow from financing activities came to EUR 4.0 million as a result of borrowing.

Cash and cash equivalents rose by EUR 105.7 million, from EUR 25.1 million in the previous year to EUR 130.8 million at the end of the first three months of the financial year 2015/2016.

Total consolidated assets came to EUR 2,025.8 million as of the reporting date of 31 May 2015 (31 May 2014: EUR 2,048.1 million).

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 2015/2016

Total assets were reduced by impairment losses recognized on intangible assets from the acquisition of the Nordic Sugar group.

Lower receivables, mainly trade receivables, also contributed to the decline. Cash and cash equivalents were much higher than in the same period a year ago, however.

The fall in total assets was matched by a decline of approx.

EUR 119.1 million in shareholders’ equity, which led to a lower equity ratio of 63.0 per cent (prior-year period: 68.1 per cent).

Non-current provisions and liabilities went up by around EUR 34.3 million at the end of the reporting period 31 May 2014 and current provisions and liabilities were around EUR 62.4 million higher than the previous year. The latter was mainly due to much higher trade liabilities.

Cash and cash equivalents exceeded financial liabilities by EUR 123.1 million at the end of the reporting period as of 31 May 2015. At the end of the same period in the previous year (31 May 2014), the excess amount was EUR 16.8 million.

S u p p l e m e n ta r y r e p o r t There have been no significant changes to the situation of the company for the current year since the reporting date of the interim financial statements.

Outlook A number of factors are depressing the European sugar markets in the current financial year 2015/2016. Global market prices are very low. This means sugar can be imported into the EU relatively cheaply. Sugar stocks in the EU are high at the start of the financial year 2015/2016 and the reduction of land under cultivation by almost all European sugar producers will only have an effect over the course of the current financial year. All producers are fighting hard for market share in order to secure the best possible position for themselves when the sugar market regime expires in 2017. Nordzucker is still working to optimize the company. A new efficiency drive was launched at the beginning of the calendar year 2015, which should make a substantial contribution to greater efficiency in the years ahead. The aim is to make savings of at least EUR 50 million.

As the full effect of the much lower prices will be felt in the current financial year we stand by our forecast that Nordzucker is highly unlikely to close the financial year 2015/2016 with positive earnings.

We nevertheless expect the global and European sugar markets to recover again in the medium term. A further rise in demand for sugar, combined with a flat supply, will ultimately result in higher sugar prices again. Prices for new contracts indeed seem to have reached a floor and customers are becoming more interested in longer-term contracts.

Nordzucker is adhering to its strategy of examining growth opportunities in the sugar market inside and outside Europe and of maintaining a substantial level of capital expenditure in its European core business. These projects will not have any significant effect on revenues and income in the current financial year 2015/2016, but may result in additional capital expenditure. Nordzucker is financially very well positioned and so has the ability to make these kinds of investments in the future.

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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 2015/2016

C o n s o l i dat e d f i n a n c i a l s tat e m e n t s N o r d z u ck e r AG

C o n s o l i dat e d i n c o m e s tat e m e n t Nordzucker AG, Braunschweig, Germany, for the period from 1 March 2015 to 31 May 2015

1/3/2015 – 31/5/2015

1/3/2014 – 31/5/2014

Change

373,801

500,786

– 126,985

– 322,674

– 407,034

84,360

51,127

93,752

– 42,625

Sales costs

– 36,957

– 37,901

944

Administrative expenses

– 18,202

– 20,293

2,091

6,217

8,443

– 2,226

in EUR thousands Revenues Production costs Gross profit

Other income Other expenses Operating result (EBIT) Financial income Financial expenses Result from companies accounted for using the equity method Earnings before taxes Income taxes Consolidated net income of which attributable to non-controlling interests of which attributable to shareholders of the parent company

– 8,894

– 5,002

– 3,892

– 6,709

38,999

– 45,708

149

763

– 614

– 1,897

– 4,316

2,419

– 102

0

– 102

– 8,559

35,446

– 44,005

1,701

– 11,944

13,645

– 6,858

23,502

– 30,360

– 66

951

– 1,017

– 6,792

22,551

– 29,343

C o n s o l i d at e d 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 1/3/2015 – 31/5/2015

1/3/2014 – 31/5/2014

Change

– 6,858

23,502

– 30,360

Remeasurement of defined benefit plans

11,625

– 10,138

21,763

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

– 3,445

3,041

– 6,486

Other comprehensive income from items not reclassified to the income statement

8,180

– 7,097

15,277

Exchange differences on translating foreign operations

1,460

– 6,083

7,543

Net result of cash flow hedges

1,971

– 2,006

3,977

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

– 583

571

– 1,154

Other comprehensive income from items reclassified to the income statement

2,848

– 7,518

10,366

Consolidated comprehensive income after taxes

4,170

8,887

– 4,717

in EUR thousands Consolidated net income

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

– 65

953

– 1,018

4,235

7,934

– 3,699

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 2015/2016

C o n s o l i dat e d c a s h f lo w s tat e m e n t Nordzucker AG, Braunschweig, Germany, for the period from 1 March 2015 to 31 May 2015

in EUR thousands Earnings before taxes Interest and similar income Interest and similar expenses Depreciation, amortisation and impairment/reversals of impairment of non-current assets Amortisation and impairment/reversals of impairment of non-current financial investments

1/3/2015 – 31/5/2015

1/3/2014 – 31/5/2014

Change

– 8,559

35,446

– 44,005

– 76

– 760

684

1,593

3,979

– 2,386

18,292

19,927

– 1,635

0

– 4

4

Changes in non-current provisions

2,061

9,616

– 7,555

Other non-cash expenses/income

1,435

– 27

1,462

102

0

102

– 3,498

8,907

– 12,405

– 22

164

– 186

200,447

250,305

– 49,858

– 112,212

– 325,261

213,049

76

155

– 79

– 561

– 2,062

1,501

140

– 17,194

17,334

99,218

– 16,809

116,027

57

152

– 95

– 8,098

– 20,082

11,984

0

22

– 22

– 273

– 340

67

Net income from joint ventures Changes in current provisions Proceeds on disposal of non-current assets Changes in inventories, trade receivables and other assets not attributable to investing or financing activities Changes in trade payables and other liabilities not attributable to investing or financing activities Interest received in the financial year Interest paid in the financial year Taxes paid in the financial year Cash flow from operating activities Proceeds on disposal of property, plant and equipment Payments for investments in property, plant and equipment Proceeds on disposal of intangible assets Payments for investments in intangible assets Proceeds on disposal of financial assets Payments for investments in financial assets Cash flow for/from investing activities

2

3

– 1

– 5,133

– 245

– 4,888

– 13,445

– 20,490

7,045

Proceeds from borrowing

13

3,957

– 3,944

Loan repayments

– 1

0

– 1 – 3,945

Cash flow from financing activities

12

3,957

Changes in cash and cash equivalents

85,785

– 33,342

119,127

Cash and cash equivalents at the beginning of the period

44,989

58,339

– 13,350

Effect of foreign exchange rate changes Cash and cash equivalents at the end of the period

10

86

– 76

130,784

25,083

105,701

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 2015/2016

C o n s o l i dat e d b a l a n c e s h e e t as of 31 May 2015, Nordzucker AG, Braunschweig, Germany

ASSETS in EUR thousands

28/2/2015

31/5/2015

31/5/2014

Non-current assets Fixed assets Intangible assets Property, plant and equipment Investment property

25,323

24,298

64,435

848,848

841,553

847,711

3,521

2,983

4,471

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

2,568

7,599

2,788

23,931

23,931

23,808

26,499

31,530

26,596

904,191

900,364

943,213

Financial assets

0

0

0

Other assets

6

6

9

6

6

9

Receivables and other assets

Deferred taxes

4,792

5,314

6,215

908,989

905,684

949,437

Raw materials, consumables and supplies

53,512

52,435

58,613

Work in progress

47,175

46,642

53,371

885,429

695,605

692,037

986,116

794,682

804,021

138,889

150,766

208,832

67

93

154

6,820

5,327

10,067

Financial assets

13,197

18,737

17,991

Other assets

42,742

18,218

31,023

201,715

193,141

268,067

Current assets Inventories

Finished goods and merchandise Receivables and other assets Trade receivables Receivables from related parties Current income tax receivables

Cash and cash equivalents Current Assets Assets held for sale

44,989

130,784

25,083

1,232,820

1,118,607

1,097,171

1,703

1,519

1,500

1,234,523

1,120,126

1,098,671

2,143,512

2,025,810

2,048,108

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 2015/2016

Equit y and liabilities in EUR thousands

28/2/2015

31/5/2015

31/5/2014

Subscribed capital

123,651

123,651

123,651

Capital reserves

127,035

127,035

127,035

1,035,604

1,028,812

1,099,637

Shareholders’ equity

Retained earnings Other comprehensive income Equity attributable to shareholders of the parent company Non-controlling interests

– 56,383

– 45,355

– 6,089

1,229,907

1,234,143

1,344,234

41,636

41,570

50,548

1,271,543

1,275,713

1,394,782

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

219,334

208,878

154,802

Other provisions

33,603

34,693

26,377

Financial liabilities

7,407

7,380

4,569

Liabilities towards related parties

5,500

5,500

5,500

18

18

18

Other liabilities

9,220

8,932

11,278

Deferred taxes

83,955

87,268

115,797

359,037

352,669

318,341

Provisions for pensions and similar obligations

11,308

11,291

11,336

Other provisions

66,845

63,404

98,208 3,733

Other financial liabilities

Current provisions and liabilities

Financial liabilities Current income tax liabilities Trade payables Liabilities towards related parties Other financial liabilities Other liabilities

248

261

16,269

13,953

5,156

327,348

225,452

121,673

39,777

38,259

33,984

6,035

5,595

7,981

45,102

39,213

52,914

512,932

397,428

334,985

2,143,512

2,025,810

2,048,108

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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 2015/2016

C o n s o l i dat e d s tat e m e n t o f c h a n g e s in shareholders’ equity Nordzucker AG, Braunschweig, Germany

in EUR thousands

Subscribed capital

As of 1/3/2014

123,651

Net income

Retained earnings

Other comprehensive income

127,035 1,077,009

8,528

Capital reserves

Consolidated comprehensive income

22,551

Dividend payment Other

Total equity

1,336,223

49,595

22,551

951

23,502

– 14,617

– 14,617

2

– 14,615

– 14,617

8,887

22,551

Other comprehensive income

NonEquity attributable to shareholders of controlling interests the parent company

1,385,818

7,934

953

0

0

0

0

77

77

0

77

As of 31/5/2014

123,651

127,035 1,099,637

– 6,089

1,344,234

50,548

1,394,782

As of 1/3/2015

123,651

127,035 1,035,604

– 56,383

1,229,907

41,636

1,271,543

– 6,792

– 66

– 6,858

11,028

11,028

0

11,028

11,028

Net income

– 6,792

Other comprehensive income Consolidated comprehensive income

4,236

– 66

4,170

Dividend payment

0

0

0

0

Other

0

0

0

0

1,234,143

41,570

1,275,713

As of 31/5/2015

– 6,792

123,651

127,035 1,028,812

– 45,355

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 2015/2016

Financial c alendar

15 October 2015 Publication of the Interim Report for the first six months of 2015/16 15 January 2016 Publication of the Interim Report for the first nine months of 2015/16

o n l i n e p u b l i c at i o n s The following publications can be downloaded from www.nordzucker.de > Annual Reports and Interim Reports > Decleration of compliance > Letter to shareholders

Subscribe to the Interim Report at www.nordzucker.de

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Nordzucker AG K端chenstrasse 9 38100 Braunschweig Germany 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 Martin Eichholz Telephone: +49 (0) 531 2411-119 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.