- - INTERIM REPORT FIRST QUARTER 2015/16. 1 March to 31 May 2015 Publication date: 9 July year at 1,629 (1,773) million. 57 (96) million.

Transcription

1 Q1 INTERIM REPORT FIRST QUARTER 2015/16 1 March to 31 May 2015 Publication date: 9 July 2015 CONSOLIDATED GROUP REVENUES down 8 % from last year at 1,629 (1,773) million. CONSOLIDATED GROUP OPERATING PROFIT falls to 57 (96) million. FORECAST FOR THE FULL 2015/16 fiscal year is confirmed: Consolidated group revenues expected to decline to around 6.0 to 6.3 (2014/15: 6.8) billion and operating profit projected to drop considerably to within a range of between 50 and 150 (2014/15: 181) million.

2 CONTENTS FINANCIAL CALENDAR ANNUAL GENERAL MEETING FOR FISCAL 2014/15 16 JULY 2015 Q2 1 ST HALF YEAR REPORT 2015/16 8 OCTOBER 2015 Q3 1 ST TO 3 RD QUARTER REPORT 2015/16 13 JANUARY 2016 PRESS AND ANALYSTS CONFERENCE FISCAL 2015/16 19 MAY 2016 Q1 1 ST QUARTER REPORT 2016/17 7 JULY 2016 ANNUAL GENERAL MEETING FOR FISCAL 2015/16 14 JULY 2016 Q2 1 ST HALF YEAR REPORT 2016/17 13 OCTOBER 2016 This interim report is available in German and English. This translation is provided for convenience and should not be relied upon exclusively. PDF files of the interim report can be downloaded from the company s website at: or Südzucker AG s fiscal year is not aligned with the calendar year. The first quarter covers the period 1 March to 31 May. On the following pages, the numbers in brackets represent the corresponding previous year s figures or items. Numbers and percentages stated are subject to differences due to rounding. Typing and printing errors reserved.

3 CONTENTS 02 INTERIM MANAGEMENT REPORT 02 Economic report 13 Events after the balance sheet date 13 Risks and opportunities 14 Outlook 16 INTERIM CONSOLIDATED FINANCIAL STATEMENTS 16 Comprehensive income 17 Cash flow statement 18 Balance sheet 20 Changes in shareholders equity 22 NOTES TO THE INTERIM FINANCIAL STATEMENTS 22 Segment report 24 (01) Principles of preparation of the interim consolidated financial statements 25 (02) Companies included in consolidation 25 (03) Earnings per share 26 (04) Inventories 26 (05) Trade receivables and other assets 27 (06) Other provisions and accruals 27 (07) Trade payables and other liabilities 28 (08) Financial liabilities, securities and cash and cash equivalents (net financial debt) 29 (09) Additional disclosures on financial instruments 31 (10) Related parties 31 (11) Personnel

4 OVERVIEW KEY FIGURES to 31 May st quarter 2015/ /15 + / in % Revenues and earnings Revenues million 1,629 1, EBITDA million EBITDA margin % Depreciation million Operating profit million Operating margin % Net earnings million Cash flow and investments Cash flow million Investments in fixed assets 1 million Investments in financial assets / acquisitions million Total investments million Performance Fixed assets 1 million 2,864 2, Goodwill million 1,145 1, Working capital million 2,051 2, Capital employed million 6,173 6, Capital structure Total assets million 8,197 8, Shareholders equity million 4,515 4, Net financial debt million Equity ratio % Net financial debt as % of equity (Gearing) % Shares Market capitalization million 2,899 3, Total shares issued as of 31 May Millions of shares Closing price on 31 May Earnings per share on 31 May Average trading volume / day Thousands of shares 2,013 2, MDAX closing price on 31 May Points 20,450 16, Performance Südzucker share 1 March to 31 May % Performance MDAX 1 March to 31 May % Employees 18,482 18, Including intangible assets.

5 OVERVIEW 1 OVERVIEW First quarter 2015/16 Consolidated group revenues down 8 % from last year at 1,629 (1,773) million. Consolidated group operating profit falls to 57 (96) mil due to lower sugar segment earnings. lion Sugar segment reports lower revenues and posts loss due to sharply lower quotasugar sales revenues across Europe: Revenues: 17 % to 712 (862) million Operating profit: 13 (45) million Special products segment reports significantly higher op profit driven by higher revenues and lower costs: erating Revenues: + 3 % to 445 (434) million Operating profit: 37 (25) million CropEnergies segment revenues decline slightly while operating profit improves substantially, driven by higher ethanol sales revenues, lower net raw material costs and cost savings from the temporary shutdown of the bioethanol plant in Wilton, Great Britain: Revenues: 6 % to 181 (192) million Operating profit: 14 (5) million In spite of higher revenues, fruit segment reports lower earnings due to higher costs: Revenues: + 2 % to 291 (285) million Operating profit: 19 (21) million Forecast for full fiscal 2015/16 Consolidated group revenues expected to decline to around 6.0 to 6.3 (2014/15: 6.8) billion. Operating profit expected to drop considerably to within a range of between 50 and 150 (2014/15: 181) million. ROCE falls significantly due to lower operating profit. Revenues by segment 1 st quarter 2015/16 1 st quarter million 2015/ /15 + / in % Sugar segment Special products segment CropEnergies segment Fruit segment Group total 1,629 1, TABLE 01 Operating profit by segment 1 st quarter 2015/16 1 st quarter million 2015/ /15 + / in % Sugar segment Special products segment CropEnergies segment 14 5 > 100 Fruit segment Group total TABLE 02

6 2 INTERIM MANAGEMENT REPORT Economic report ECONOMIC REPORT Südzucker Group business development results of operations REVENUES AND OPERATING PROFIT Consolidated group revenues for the first quarter of fiscal 2015/16 were lower than last year at 1,629 (1,773) million. The sugar and CropEnergies segments revenues declined as expected while the special products and fruit segments reported an increase. Consolidated group operating profit fell to 57 (96) million in the first quarter. The result was driven mainly by the anticipated sharp decline in the sugar segment s operating profit. The fruit segment s operating profit was also lower than last year, while the special products and CropEnergies segments operating profits were sharply higher. Overall, group consolidated operating profit improved in the first quarter of the current fiscal year compared to the second half of fiscal 2014/15. Revenues and operating profit 1 st quarter 2015/ /15 + / in % Revenues million 1,629 1, EBITDA million Depreciation on fixed assets and intangible assets million Operating profit million Result from restructuring / special items million 5 0 Income from companies consolidated at equity million Income from operations million EBITDA margin % Operating margin % Investments in fixed assets 1 million Investments in financial assets / acquisitions million Total investments million Shares in companies consolidated at equity million Capital employed million 6,173 6, Employees 18,482 18, Including intangible assets. TABLE 03

7 INTERIM MANAGEMENT REPORT Economic report 3 Income statement 1 st quarter million 2015/ /15 + / in % Revenues 1,629 1, Operating profit Result from restructuring / special items 5 0 Income from companies consolidated at equity Income from operations Financial result Earnings before income taxes Taxes on income Net earnings of which attributable to Südzucker AG shareholders of which attributable to hybrid capital of which attributable to other noncontrolling interests Earnings per share ( ) TABLE 04 INCOME FROM OPERATIONS Income from operations of 61 (106) million comprises an operating profit of 57 (96) million, the result from restructuring and special items of 5 (0) million and the earnings contribution from companies consolidated at equity of 9 (10) million. INCOME FROM RESTRUCTURING AND SPECIAL ITEMS The result from restructuring and special items of 5 (0) million is primarily from the CropEnergies segment and relates to the first quarter fixed costs of the temporarily closed bioethanol factory in Wilton, Great Britain. INCOME FROM COMPANIES CONSOLIDATED AT EQUITY Income from companies consolidated at equity was 9 (10) million. The sugar segment s total of 3 (3) million relates mainly to its share of earnings from British trading company ED&F Man Holdings Ltd., Studen Group and jointventure distributor Maxi S.r.l. The special products segment s total includes 6 (7) million for its share of earnings from Hungrana Group s starch and bioethanol businesses. FINANCIAL RESULT The financial result in the first three months of fiscal 2015/16 improved to 5 ( 7) million. Average debt was higher than the year prior and net interest expense was reported at 8 ( 11) million. The other financing activities item was positive for the first three months of the fiscal year at 3 (4) million and is comparable to last year. TAXES ON INCOME Earnings before taxes were reported at 56 (99) million and taxes on income totaled 15 ( 22) million. The group s tax rate was 27 (22) %. CONSOLIDATED NET EARNINGS Of the consolidated net earnings of 41 (77) million, 20 (48) million are allocated to Südzucker AG shareholders, 7 (7) million to hybrid bondholders and 14 (22) million to other noncontrolling interests, mainly the coowners of AGRANA Group and Crop Energies Group. EARNINGS PER SHARE Earnings per share came in at 0.10 (0.24). The calculation was based on the timeweighted average of (204.2) million shares outstanding.

8 4 INTERIM MANAGEMENT REPORT Economic report Investments and financing financial position CASH FLOW Cash flow tracked declining operating profits and came in at 102 million, down from 152 million during the same period last year. Cash flow was thus 6.2 (8.6) % of sales revenues in the first three months. WORKING CAPITAL The cash flow from working capital of 271 million was mainly attributable to payment of beet related liabilities from the 2014/15 campaign. The latter were only partly covered by the sale of sugar inventories. INVESTMENTS IN FIXED ASSETS Investments in fixed assets (including intangible assets) totaled 73 (66) million. The sugar segment s investments of 32 (28) million were mainly for replacements, as well as energy efficiency and logistics improvements. The special products segment invested 29 (25) million, most of which was for construction of the starch plant in Zeitz and the startup of the biomass boiler at the BENEO location in Pemuco, Chile. The CropEnergies segment invested 8 (3) million to further optimize its production systems. The fruit segment invested 4 (10) million, mainly to expand production capacity in the fruit preparations area. ADDITIONAL SUBSIDIARY SHARE PURCHASES This item relates to last year s acquisition of a minority stake in AGRANA Bioethanol GmbH by AGRANA Stärke GmbH. DEVELOPMENT OF NET FINANCIAL DEBT The seasonal cash outflow of 271 million from working capital could only be partly offset by the cash inflow of 102 million. This resulted in the seasonal increase in net financial debt from 593 million on 28 February 2015 to 829 million on 31 May The increase of 236 million includes the investments of 73 million. Cash flow statement 1 st quarter million 2015/ /15 + / in % Cash flow Increase ( )/ decrease (+) in working capital Investments in fixed assets Sugar segment Special products segment CropEnergies segment 8 3 > 100 Fruit segment Total investments in fixed assets Investments in financial assets / acquisitions Total investments Increases in stakes held in subsidiaries Capital increase / decrease 0 0 Dividends paid Including intangible assets. TABLE 05

9 INTERIM MANAGEMENT REPORT Economic report 5 Balance sheet Balance sheet million 31 May May / in % Assets Intangible assets 1,185 1, Fixed assets 2,825 2, Remaining assets Noncurrent assets 4,518 4, Inventories 1,777 1, Trade receivables Remaining assets Current assets 3,679 3, Total assets 8,197 8, Liabilities and equity Equity attributable to shareholders of Südzucker AG 3,161 3, Hybrid capital Other noncontrolling interests Total equity 4,515 4, Provisions for pensions and similar obligations Financial liabilities Remaining liabilities Noncurrent liabilities 1,887 1, Financial liabilities Trade payables Remaining liabilities Current liabilities 1,795 1, Total liabilities and equity 8,197 8, Net financial debt Equity ratio Net financial debt as % of equity (gearing) TABLE 06

10 6 INTERIM MANAGEMENT REPORT Economic report NONCURRENT ASSETS Noncurrent assets rose 70 million from last year s record date to 4,518 (4,448) million. Fixed assets rose on account of investments during the period to 2,825 (2,681) million after writedowns of 144 million. Of the remaining assets of 508 (578) million, 317 (297) million relate to the carrying value of companies consolidated at equity. Intangible assets declined slightly to 1,185 (1,189) million, while goodwill was unchanged. CURRENT ASSETS Current assets were down 174 million to 3,679 (3,853) million. The main reason is the reduction of 120 million in inventories, especially in the sugar segment, which brought the total to 1,777 (1,897) million. Trade receivables rose 11 million to 998 (987) million. The decline of 65 million in other assets to 904 (969) million is mainly due to reduced cash on hand. SHAREHOLDERS EQUITY Shareholders equity declined 150 million to 4,515 (4,665) million; the equity ratio was only slightly less than last year at 55 (56) % as total assets contracted. The drop of 129 million in Südzucker AG shareholders equity to 3,161 (3,290) million reflects mainly the income neutral revaluation in the second and fourth quarters of 2014/15 of defined benefit pension obligations as a result of the sharply lower discount rate, as well as the lower period earnings. Accordingly, other noncontrolling interests declined 21 million to 670 (691) million. NET FINANCIAL DEBT Net financial debt rose 159 million to 829 (670) million as of 31 May The ratio of net financial debt to equity was 18 (14) %. Employees The number of persons employed by the group in the first three months of fiscal 2015/16 was slightly higher than at the same time last year at 18,482 (18,396). Employees by segment 1 st quarter 2015/ /15 + / in % Sugar 7,345 7, Special products 4,480 4, CropEnergies Fruit 6,219 6, Group 18,482 18, TABLE 07 NONCURRENT LIABILITIES Noncurrent liabilities rose 171 million to 1,887 (1,716) million. This was driven mainly by higher provisions for pensions and similar obligations, which rose 101 million to 824 (723) million after the discount rate was adjusted from 3.00 % on 31 May 2014 to 1.75 % for material plans on 28 February The same rate was applied on 31 May Financial liabilities rose 97 million to 771 (674) million. Other liabilities fell 27 million to 292 (319) million. This includes tax liabilities of 79 (107) million. CURRENT LIABILITIES Current liabilities fell 125 million to 1,795 (1,920) million. The decline was driven by the change in trade payables, which were down 33 million to 467 (500) million. Other debts, consisting of other provisions, taxes owed and other liabilities, were reduced by 48 million to 647 (695) million. In addition, current financial liabilities fell 44 million to 681 (725) million.

11 INTERIM MANAGEMENT REPORT Economic report 7 Sugar segment Market developments, economic policy, general framework WORLD SUGAR MARKET German market analyst F.O. Licht s third estimate of the world s sugar balance for the 2014/15 campaign year, released in May 2015, forecasts that production will fall to (182.2) million tonnes and consumption rise further to (176.2) million tonnes. Taking into account other volume changes, inventories are projected to stabilize at 77.8 (77.5) million tonnes of sugar, or 43.4 (44.0) % of one year s consumption. During the course of the first quarter, the world market price for white sugar rose from 331 / t to over 350 / t, but had fallen back to 318 / t by the end of the quarter. Global market sugar prices 1 June 2012 to 31 May 2015, London, nearest forward trading month 1, t / Ww. in / t t / Ww. in USD / t DIAGRAM 01 EU SUGAR MARKET Given the record European sugar beet production yields, it is expected that the current 2014/15 sugar marketing year s EU sugar quotas will be filled and that nonquota sugar production will be very high. Due to sinking sugar prices in the EU, preferential imports during the current sugar marketing year will be significantly lower than last year. This will lead to a further decline in quota sugar inventories to the end of the 2014/15 sugar marketing year. However, European sugar market demand will still be adequately satisfied by the EU s supply of beet sugar. For preferential imports to rise, the EU price level would have to be at least high enough to cover the costs of the imported sugar. EU price reporting 1 March 2012 to 30 April 2015 / t white sugar Source: EU commission, AGRI C4. DIAGRAM 02 The EU price report for April 2015 still showed a very low 417 / t for bulk sugar (ex works). Export licenses for 1.35 million tonnes of nonquota sugar were granted for the 2014/15 sugar marketing year, the same as last year. A dutyfree nonquota sugar import volume of 0.4 million tonnes annually for use by the chemical, pharmaceutical and fermentation industries is available until the 2016/17 sugar marketing year. In previous years, this quota was hardly used. ENERGY MARKET The global crude oil glut was sustained in the first quarter of 2015/16 by excess supply from the OPEC nations. The fivemonth high of 68 USD / barrel reached at the beginning of the quarter due to reduced US crude oil inventories had evaporated by the end of the quarter due to the rising US dollar. The price of North Sea Brent Crude swung between 53 and 68 USD / barrel over the course of the first quarter and closed at 63 USD / barrel on 29 May Gas prices trended sideways during the first quarter of 2015/16. However, relatively empty gas tanks in Europe along with the worldwide geopolitical crises caused prices to fluctuate widely during the period. Nevertheless, at the end of the first quarter, gas prices were trending slightly lower on account of weather conditions during the spring and summer months.

12 8 INTERIM MANAGEMENT REPORT Economic report EU SUGAR POLICIES, WTO NEGOTIATIONS AND FREE TRADE AGREEMENTS There were no material changes in the legal and political general conditions associated with EU sugar policies, WTO negotiations and free trade agreements during the first quarter. They remain as described on page 58 of the 2014/15 annual report (consolidated management report, business report, sugar segment). Business performance Sugar segment REVENUES AND OPERATING PROFIT The sugar segment s revenues for the first quarter of fiscal 2015/16 fell to 712 (862) million. At the beginning of the 2014/15 sugar marketing year in October 2014, quota sugar sales revenues in the EU again fell significantly. This decline is now reflected in the yearoveryear comparison. Sugar volume was also below last year s. Export prices for nonquota sugar were lower than last year as world market prices retreated. Operating profit in the first quarter of the new fiscal year stabilized in comparison to developments in the second half of last fiscal year. Still, as expected, operating profit was negative at 13 (45) million. Even though quota sugar sales revenues have now stabilized, they are still sharply lower than last year, which is the main reason for the earnings decline. The result from companies consolidated at equity in the sugar segment was 3 (3) million, most of which relates to the earnings contribution from the British trading company ED&F Man Holdings Ltd., but also the earnings contributions from Studen Group and jointventure distributor Maxi S.r.l. The share of earnings contributed by ED&F Man in the first quarter of 2015/16 was from the company s second quarter of fiscal 2014/15, which ran from 1 January to 31 March During this period, the difficult global sugar market situation continued to negatively impact profits in the sugar seg Business performance Sugar segment 1 st quarter 2015/ /15 + / in % Revenues million EBITDA million Depreciation on fixed assets and intangible assets million Operating profit million Result from restructuring / special items million Income from companies consolidated at equity million Income from operations million EBITDA margin % Operating margin % Investments in fixed assets 1 million Investments in financial assets / acquisitions million Total investments million Shares in companies consolidated at equity million Capital employed million 3,415 3, Employees 7,345 7, Including intangible assets. TABLE 08

13 INTERIM MANAGEMENT REPORT Economic report 9 ment. However, the coffee and MLP (Man Liquid Products) segments continued to post strong earnings. The capital markets division also showed a profit. All in all, ED&F Man Group was able to report a small profit for its second quarter of 2014/15. BEET CULTIVATION AND 2015/16 CAMPAIGN Südzucker Group s beet cultivation area was reduced by 13.6 % in 2015, to about 350,000 (405,100) ha. Following last year s high yields many beet growers had to face a carry forward. This year, planting began for the most part as early as in previous years, amidst average to excellent planting conditions. Overall beet development was generally good although in some regions conditions have been a little too dry so far. INVESTMENTS Investments in the first three months totaled 32 (28) million and were mainly for replacements, efficiency improvements such as the molasses desugaring system in Tulln, Austria, and the press pellet preparation installation in Roye, France. Another priority is energy savings projects; for example, refurbishment of the evaporator station in Leopoldsdorf, Austria and the sugar drying area in Tienen, Belgium. Also noteworthy are logistics and infrastructure projects such as the ones at the Plattling and Zeitz factories, as well as in Tienen, Belgium, and Kaposvár, Hungary. Special products segment REVENUES AND OPERATING PROFIT The special products segment s revenues rose from 434 to 445 million in the first quarter. This was attributable to overall volume growth and a positive currency exchange impact. On the other hand, byproduct sales revenues in the starch division were lower. Operating profit was sharply higher at 37 (25) million. Almost all divisions contributed to the increase. The operating profit growth was driven by higher revenues and lower raw material costs. The result of 6 (7) million from companies consolidated at equity is mainly attributable to the share of earnings from Hungrana Group s starch and bioethanol businesses. Business performance Special products segment 1 st quarter 2015/ /15 + / in % Revenues million EBITDA million Depreciation on fixed assets and intangible assets million Operating profit million Result from restructuring / special items million 0 0 Income from companies consolidated at equity million Income from operations million EBITDA margin % Operating margin % Investments in fixed assets 1 million Investments in financial assets / acquisitions million 0 0 Total investments million Shares in companies consolidated at equity million Capital employed million 1,423 1, Employees 4,480 4, Including intangible assets. TABLE 09

14 10 INTERIM MANAGEMENT REPORT Economic report INVESTMENTS The special products segment invested 29 (25) million. The BENEO division s spending was mainly on efficiency improvements and the startup of the biomass power plant to improve energy use at the site in Pemuco, Chile. The starch division s main project is the construction of the wheat starch plant at the Zeitz site. CropEnergies segment Market developments, economic policy, general framework ETHANOL MARKET Market analysts are forecasting that ethanol production in the United States will rise slightly to 56.0 million m 3 in 2015, still higher than domestic consumption of 52.6 million m 3. Net bioethanol exports are expected to rise further to 3.0 (2.8) million m 3. The onemonth ethanol futures contract on the Chicago Board of Trade (CBOT) recovered from 380 USD / m 3 at the beginning of March 2015 to 420 USD / m 3 at the end of May In January 2015, the price of ethanol in the United States had fallen to about 343 USD / m 3, thereby reaching mid2005 levels. In contrast, Brazilian ethanol prices rose to over 600 USD / m 3 FOB Santos at the end of January 2015 in the lead up to the Brazilian government s decision to boost the minimum blend ratio for ethanol from 25 % to 27 % (E27) as of midmarch However, from the start of the cane harvest to the end of May 2015, the price slid back to 460 USD / m 3. Market analysts are expecting bioethanol consumption to rise sharply; the forecast calls for a 9.5 % jump to 29.4 million m 3 for the 2015/16 sugar marketing year. With production rising only slightly to 29.2 million m³, this would mean that bioethanol supply and demand in Brazil would just barely be balanced. Ethanol prices in Europe recovered after reaching an alltime low of 417 / m 3 FOB Rotterdam on 15 January At the beginning of March 2015, ethanol prices were quoted at 470 / m 3, but had risen to 540 / m 3 by the end of May. The price rise was driven by lower capacity utilization in Europe combined with the fact that import volumes remained moderate. In view of falling gasoline consumption and stagnating blending requirements, market analysts are expecting fuel grade ethanol consumption in the EU to fall 3.7 % to 5.1 (5.3) million m 3 in As a result, the current potential to quickly and cheaply cut greenhouse gas emissions by using more fuelgrade ethanol will again not be fully exploited in the EU in In Germany on the other hand, fuel grade ethanol consumption rose 1.9 % to 1.55 million m 3 in Preliminary consumption data for January to March 2015 shows a 7.2 % decline in fuel grade ethanol volumes, bringing the total to about 310,000 m 3. E10 volume thus fell 9.3 % from January to March 2015, to 608,000 tonnes. This corresponds to a share of 14.0 % of the gasoline market. GRAIN MARKET In its 10 June 2015 estimate, the US Department of Agriculture (USDA) forecasts that world grain production (excluding rice) will reach 1,998 million tonnes in 2015/16, slightly less than last year s record harvest. In view of the projected grain consumption of 2,001 million tonnes, grain supply and demand is expected to be largely balanced and as a result, inventories are expected to be little changed at 430 (433) million tonnes. The EU Commission is forecasting another bountiful harvest of 310 million tonnes for the EU s 2015/16 grain marketing year, again significantly higher than the demand of 283 million tonnes. The largest share of grain consumption, over 60 %, continues to be attributable to animal feed. The EU continues to be a major contributor to world market grain supplies with net exports of 26.1 (31.9) million tonnes. Only 11.2 million tonnes or 3.6 % of the EU s grain harvest are expected to be used to produce bioethanol, whereby about onethird of this volume will become available as food and animal feed byproducts. European wheat prices on the Euronext in Paris were quoted at 176 / t at the end of May 2015, only slightly under the 185 / t quoted at the beginning of March Overall, grain prices during the first quarter were relatively stable. Fluctuations during the period were caused among other things by forecasts related to weatherrelated problems during planting and as plants developed. Added to that are the EU s continued high export volumes driven by the weak euro in relation to the US dollar. RENEWABLE ENERGY DIRECTIVE, FUEL QUALITY DIRECTIVE, EUROPEAN CLIMATE AND ENERGY PACKAGE There were no material changes in the legal and political general conditions associated with the EU renewable energy directive, fuel quality directive, etc. during the first quarter. They remain as described on pages 70 to 72 of the 2014/15 annual report

15 INTERIM MANAGEMENT REPORT ECOnomic report 11 (consolidated management report, business report, Crop Energies segment). As reported therein, the European Parliament and Council had come to an agreement on changes to the renewable energy directive and the fuel quality directive in April As expected, the European Parliament ratified the changes on 28 April The Council s decision is expected shortly. Business performance CropEnergies segment REVENUES AND OPERATING PROFIT The CropEnergies segment s revenues were down 11 million to 181 (192) million in spite of the recovery in ethanol sales revenues in the first quarter. This was driven especially by lower production volumes resulting from the plant overhaul in Wanze, Belgium and the temporary shutdown of the plant in Wilton, Great Britain. Operating profit on the other hand rose sharply from 5 to 14 million. Reduced production and lower animal feed sales revenues were offset by lower raw material prices, as well as the recovery in ethanol sales revenues. The temporary shutdown of the plant in Wilton, Great Britain, generated cost savings and improved the operating cost structure. The result from restructuring and special items of 5 (0) million in the first quarter relates to the fixed costs associated with the temporary closure of the bioethanol factory in Wilton, Great Britain. INVESTMENTS The segment invested 8 (3) million in the first three months, mainly to broaden its product portfolio and improve production efficiencies at its Belgian and German sites. Business performance CropEnergies segment 1 st quarter 2015/ /15 + / in % Revenues million EBITDA million Depreciation on fixed assets and intangible assets million Operating profit million 14 5 > 100 Result from restructuring / special items million 5 0 Income from companies consolidated at equity million 0 0 Income from operations million EBITDA margin % Operating margin % Investments in fixed assets 1 million 8 3 > 100 Investments in financial assets / acquisitions million 0 0 Total investments million 8 3 > 100 Shares in companies consolidated at equity million Capital employed million Employees Including intangible assets. TABLE 10

16 12 INTERIM MANAGEMENT REPORT Economic report Fruit segment Market developments, economic policy, general framework MARKETS The still slightly reduced demand for fruit preparations in the EU is offset by only modest market growth rates in noneuropean markets. However, macroeconomic and political problems are slowing market growth in the highgrowth regions of Eastern Europe (Russia, Ukraine, White Russia), North Africa (Egypt, Algeria), the Middle East, Mexico and Argentina. Markets such as Brazil, China and Turkey continue to trend higher, and fruit yoghurt consumption is stable in the developed countries in the AsiaPacific region, especially South Korea and Australia. For fruit juice concentrates, Western European consumption of juices with a high ratio of juice continues to fall, especially in Germany. Sanctions banning the import of fresh fruit from the EU into Russia together with cheap apples due to the bountiful harvest drove apple juice concentrate prices sharply lower in the 2014 campaign. Low prices and the US dollar to euro exchange rate, which was favorable to European exports, recently led to increased sales of European apple juice concentrates to customers in the United States. Russian import restrictions on goods from Ukraine made it necessary to import locally produced products to Europe, from where they were distributed further. RAW MATERIAL MARKETS The harvests for the leading fruit, strawberries, has been completed in the Mediterranean climate zones. Prices for the continental types in Poland, as well as China for the Asian market, are expected to be the same as last year. Buyers were able to partially offset the negative impact for AGRANA raw material purchases of the weaker euro versus the US dollar. Prices trended higher only in the South American procurement market. The buying cycles for tropical fruits are complete. Below average supplies and the strength of the US dollars drove prices higher as expected, especially in Europe. Attempts are being made to reduce the currency exchange risk in Russia and Ukraine by maximizing local raw material procurement in each country. In the fruit juice concentrates division, raw material availability was lower in spring 2015 despite forecasts to the contrary. This led to a significantly reduced spring campaign compared Business performance Fruit segment 1 st quarter 2015/ /15 + / in % Revenues million EBITDA million Depreciation on fixed assets and intangible assets million Operating profit million Result from restructuring / special items million 0 0 Income from companies consolidated at equity million 0 0 Income from operations million EBITDA margin % Operating margin % Investments in fixed assets 1 million Investments in financial assets / acquisitions million 0 0 Total investments million Shares in companies consolidated at equity million 0 0 Capital employed million Employees 6,219 6, Including intangible assets. TABLE 11

17 INTERIM MANAGEMENT REPORT ECONOMIC REPORT Events after the BALANCE sheet date RISKS AND OPPORTUNITIES 13 EVENTS AFTER THE BALANCE SHEET DATE to last year at European processing plants. The raw material volumes purchased were used first and foremost to produce notfromconcentrate apple juice. The shortage of raw materials combined with strong demand for apples for the processing industry in Europe most recently led to significantly higher prices. Harvest expectations for Europe are currently excellent. Following last year s record harvest, volumes are expected to decline in Hungary. Business performance Fruit segment REVENUES AND OPERATING PROFIT The fruit segment s revenues rose slightly to 291 (285) million. While sales revenues from apple juice concentrates continued to be significantly lower than last year, sales revenues and volumes grew in the fruit preparations division. Operating profit on the other hand dropped sharply in to 19 (21) million. Revenue growth in the fruit preparations division was offset by higher costs and lower margins on sales revenues in the fruit juice concentrates division. There have been no significant events since 31 May 2015 that would have a material impact on the company s assets, financial position or earnings. RISKS AND OPPORTUNITIES As an international company, Südzucker Group is exposed to macroeconomic, industryspecific and business opportunities and risks. Information about the group s risk management system, risks and potential opportunities is provided in the 2014/15 annual report under Risk management on pages 80 to 91, and in the Business report as part of segment reporting. Taking into account all known facts, we have not identified any risks, either individually or as a whole, that threaten the continued existence of Südzucker Group. INVESTMENTS Investments in the first three months totaled 4 (10) million. The fruit preparations division invested in capacity expansions, such as the installation of another production line at the new fruit preparations factory in the United States, and expansion projects in Australia. The fruit juice concentrates division invested primarily in replacements.

18 14 INTERIM MANAGEMENT REPORT Outlook OUTLOOK Group performance As already stated in our ad hoc release dated 10 April 2015, we continue to expect group revenues to decline further in fiscal 2015/16, to between 6.0 and 6.3 (2014/15: 6.8) billion. We expect the sugar and CropEnergies segments revenues to drop substantially, while the special product segment s revenues are expected to remain stable and the fruit segment s to be at least the same as last year. We continue to expect operating profit to decline significantly, to somewhere between 50 and 150 (2014/15: 181) million. The results are driven mainly by the continued declining profits in the sugar segment. We are expecting the Crop Energies segment s operating profit to improve significantly. We do not expect the special products segment to be able to quite match the high prior year s level. We expect the fruit segment to at least generate the same excellent results it did in the fiscal year just ended. Capital employed will be about the same as last year, but ROCE will be lower due to the reduced operating profit. Sugar segment We expect the sugar segment s revenues to again be sharply lower, since sales revenues have again declined since the beginning of the 2014/15 sugar marketing year on 1 October 2014, and this will now impact the full fiscal year. From today s perspective, operating profit will also be significantly lower. As a result we expect the sugar segment to report an operating loss ranging between 50 and 100 million. In past years, lower sales revenues were partially offset by falling raw material costs. The minimum beet price specified in the EU agricultural market regulation to 2017 was reached during the 2014 campaign. As a result, the shortfall from further declining sales revenues can no longer be offset by lower raw material costs. The cost reduction measures we have introduced are starting to have an impact, but will only partly offset retreating sales revenues. While lower fixed unit costs will initially have a mitigating impact due to the long 2014 campaign, the 2015 campaign will be shorter because of the reduced planting, which means fixed unit costs will likely rise again. The reduced planting was required because of the EU s quota system, which limits the volume that may be marketed, and the WTO s export restrictions. These restrictions will no longer be in effect in In spite of the lower capital employed, the anticipated operating loss will result in a negative ROCE. Special products segment We expect the special products segment s fiscal revenues to remain stable. Our forecast predicts a moderate decline in operating profit compared to last year s high level. This takes into account among other things charges from the startup of the new starch plant in Zeitz, which will start operating toward the end of fiscal 2015/16. ROCE will go down as capital employed increases and operating profit declines. CropEnergies segment Continuing highly volatile European bioethanol prices make fiscal 2015/16 difficult to forecast. The temporary shutdown of the bioethanol plant in Wilton, Great Britain, (since February 2015) will lead to lower production of both bioethanol and food and animal feed in comparison to last year, as well as a decline in revenues to a level of over 600 million. Operating profit (before restructuring and special items) is expected to come in between 10 and 40 million. In addition, a onetime charge for the fiscal year of 15 million is expected while the plant in Wilton remains closed. Since capital employed will remain unchanged, ROCE will track operating profit development.

19 INTERIM MANAGEMENT REPORT Outlook 15 Fruit segment We see the fruit segment s revenues and operating profit to be at least as good as last year. While the fruit juice concentrates division is expected to report weaker revenues and operating profit because of lower sales revenues, we expect the fruit preparations division to report higher revenues and profits driven by higher volumes. Capital employed will increase and ROCE is expected to decline given steady operating profits.

20 16 INTERIM CONSOLIDATED FINANCIAL STATEMENTS Comprehensive income COMPREHENSIVE INCOME 1 March to 31 May st quarter million 2015/ /15 + / in % Income statement Revenues 1, , Change in work in progress and finished goods inventories and internal costs capitalized Other operating income Cost of materials Personnel expenses Depreciation Other operating expenses Income from companies consolidated at equity Income from operations Financial income Financial expense Earnings before income taxes Taxes on income Net earnings of which attributable to Südzucker AG shareholders of which attributable to hybrid capital of which attributable to other noncontrolling interests Earnings per share ( ) Statement of other comprehensive income Net earnings Market value of hedging instruments (cash flow hedge) after deferred taxes Market value of securities (available for sale) after deferred taxes Exchange differences on net investments in foreign operations after deferred taxes Foreign currency translation differences Share from companies consolidated at equity Income and expenses to be recognized in the income statement in the future Remeasurement of defined benefit pension plans and similar obligations after deferred taxes Income and expenses to not be recognized in the income statement in the future Other comprehensive income / loss Comprehensive income of which attributable to Südzucker AG shareholders of which attributable to hybrid capital of which attributable to other noncontrolling interests TABLE 12