3 March 2006 - Danisco is currently negotiating with the employees at the workplaces that are planned to be closed
Danisco issued a stock exchange notice on 9 February 2006 about the expected new EU sugar regime, in which we outlined the planned efficiencies to safeguard the sugar business for the future, in particular to help ensure the future stabilised earnings level of DKK 525-675 million calculated at today's energy prices.
Danisco is currently negotiating with the employees at the workplaces that are planned to be closed as part of the efficiencies.
The negotiations with the beet growers about the future inter-professional agreements are also progressing well, however with the talks in Finland being very complicated.
The final text of the EU sugar regime does not give rise to any changes in the efficiency plans we have presented.
As a step in the transitional measures, the European Commission has proposed a temporary reduction of around 2.5 million tonnes in the EU's quota sugar production in the coming sugar campaign 2006/07 to remove the large sugar surplus in the market. Danisco's share is around 160,000 tonnes for all Danisco's sugar producing countries.
Executive Vice President, Mogens Granborg, says:
'The Commission has made a positive move to normalise the sugar market situation in the EU faster, even if it means a lower quota production for sale in the next financial year.'
Although the reduction is bigger than expected, the financial implications will not cause a change in the expectations for the underlying operations as stated above.
However, the European Commission has also decided to charge a restructuring levy on the full quota for 2006/07 even though with the quota reduction we are in reality prevented from selling the full quota production.
This levy must be considered a sort of special one-off levy intended to promote faster quota sales. The one-off levy will have a negative impact on the 2006/07 results of around DKK 100 million before any positive dynamic effects.
Expectations for the 2006/07 financial year will be announced in connection with the announcement of the annual results for 2005/06 on 20 June 2006.
Yours faithfully
Mogens Granborg
Executive Vice President