Hamburg, Jan 14 - Europe's largest sugar producer, Germany's Suedzucker, on Thursday reported positive results from its core sugar activities and confirmed its financial outlook despite the global recession.
The company also said it was now undertaking major production of sugar outside the European Union's subsidy scheme.
Suedzucker said it expected more stable conditions in the European sugar market in coming months as it settled down after heavy production cuts caused by the European Union's reforms of its heavily-subsidised sugar sector.
This would enable it to reach its previous financial forecasts despite the global recession, it said.
The company said it expected to produce 4.2 million tonnes of sugar in the current 2008/09 harvest now ending, 1 million tonnes above its 2008/09 EU production quota of 3.2 million tonnes.
Non-EU quota sugar cannot be sold as food.
In the previous 2007/08 harvest it produced 4.5 million tonnes of sugar before cuts in its production quota under the EU reforms. The company closed nine sugar refineries in the 2007/08 season.
A company spokesman said the main market for non-quota sugar this year will be bioethanol. Suedzucker controls German bioethanol maker CropEnergies.
"Sales are undertaken in a wide field of industrial users," the spokesman said, stressing that sales were not aimed solely at CropEnergies.
The chemical industry was a major target customer while some exports were also possible, he said.
Industrial sugar does not have such high profit margins as food sugar but keeping production high also enables a higher utilisation of sugar refineries which increases overall cost-efficiency, he said.
Group sales in the nine months ending Nov 30, 2008, rose 4.9 percent on the year to 4.6 billion euros. Earnings before interest and tax (EBIT) in this period rose 4.4 percent on the year to 184 million euros, the company said.
Suedzucker said it confirmed its 2008/09 financial year revenue forecast of 5.8 to 6.0 billion euros against the previous year's 5.8 billion euros and total operating profit of 230 to 260 million euros against last year's 233 million euros.
"This positive development is primarily driven by the sugar segment, since last year's restructuring costs did not recur," the company said.
"As a result of the high quota returns in the EU, the EU sugar market has started to normalise which will ease pressures in the 2008/09 sugar marketing year just started."