Cosun posts excellent 2013 results

Royal Cosun achieved an excellent financial result for 2013. Almost all business groups reported higher turnover. This was due to higher selling prices, organic growth and a number of smaller acquisitions. Group turnover passed the €2 billion mark for the first time in 2013.

Outgoing Chairman of the Board Jos van Campen said: "We are a cooperative of sugar beet growers. Our mission is to earn the highest possible financial yield per hectare of sugar beet. We again succeeded in this following the excellent result in 2012. Our ambition is to continue earning a profitable yield per hectare, after the end of the common sugar market organisation in 2017."

Results for 2013

At €2.2 billion, consolidated turnover will be some 11% higher than in 2012 (€1.9 billion). Cosun's operating profit remained at a high level, €175 million versus €193 million in 2012, even though beet payments to members were higher. With lower taxes and finance expenses, net profit for 2013 is projected at €139 million (2012: €138 million).

At Suiker Unie (sugar) turnover was lifted by higher sugar sales. Despite declining sugar prices on the world market, the result remained at a good level, thanks in part to a large proportion of the 2013 turnover being achieved on contracts concluded in 2012. Prices on the world market weakened in 2013 and the European Commission took measures to increase supply on the European market. The outcome was a sharp drop in prices at the end of 2013. Contract prices for 2014 are lower than those for 2013 and Suiker Unie's result for 2014 will be accordingly lower.
Aviko (potato products) had to cope with high raw material prices owing to the poor harvest in 2012 in combination with a disappointing growing season in 2013. This led to strong pressure on margins and underutilisation at the factories. The tide was turned in the second half of 2013 and the year ended with a positive result. The upturn is expected to continue in the first months of 2014.

Sensus (inulin) turned in a good result for 2013 and reported an increase in sales, among other in the baby food industry in Asia. Demand for inulin as a functional food ingredient for health-conscious consumers is still growing, especially in Asia and the United States.

SVZ (fruit and vegetable purees and concentrates) sustained the upward line in 2013. Its operating profit was higher and its product range is less sensitive to strong prices fluctuations. Growth was derived chiefly from sales of vegetable purees for baby food. The factory in the Netherlands was closed in mid-2013. The activities in the US developed positively.

Duynie (animal feed and starch applications) was strengthened in mid- 2013 with the acquisition of Beuker. The animal feed activities of 'Jan Bakker' were acquired at the end of the year. Both the size and the turnover of the Duynie group have therefore increased sharply. Results on animal feed activities were in line with those for 2012. The starch activities went through a difficult time in the face of fierce competition.

Developments

Cosun reported further growth in its core activities and has identified opportunities inside and outside the current product/market combinations. Growth outside Europe, the end of the common sugar market organisation in 2017 and greater price volatility for agricultural raw materials are presenting Cosun with new opportunities and challenges.

President & CEO Robert Smith said: "We'll anticipate developments where we can and respond flexibly where we have to. We are investing in our factories and facilities, in our people, in our customer relations and in innovation with a view to robust and forward-looking operations. Our healthy financial condition provides an excellent platform for growth in a developing market."

2013 beet price

The beet price is made up of a minimum EU price, the members' bonus and the sugar content and other payments. The price for quota beet delivered during the 2013 campaign is €67.26 per tonne (2012: €68.80) for beet with average extractability and average sugar content. The same price was applied for 5% of the surplus beet delivered in 2013. The total amount paid for the beet will therefore be higher than in 2012. The price payable for other surplus beet is €31.84 (2012: €31.39).

The 2013 growing season was far from ideal, the spring was particularly cold and wet. The summer was relatively dry and growth fell short of expectations. Growth recovered strongly towards the end of the season. Rain, however, frustrated the lifting. The sugar yield per hectare was 13.2 tonnes, a fraction lower than in 2012. The average financial yield per hectare for the growers was €4,917 (2012: €4,871), a new record.

The table below shows the Dutch sugar beet harvest and beet sugar production for 2013 in comparison with 2012 (between brackets):
Beet processed [in tonnes] 5,734,000 (5,772,000)
Beet sugar content [%] 16.9 (17.1)
Extractability [index] 91.1 (91.4)
Total sugar production [in tonnes] 948,000 (969,000)

Cosun will publish its definite figures for 2013 on the website in the course of March www.annualreport-cosun.com

Breda, 13 February 2014