| Marketing relationshipB2B | ProductsGeneral division into food, non-food and feed sectors; Native and modified starches, saccharification products, alcohols/bio-ethanol, by-products (feedstuffs and fertilisers) | Raw materials processedCorn (maize), wheat, potatoes |
| Key marketsCentral and Eastern Europe, principally Austria and Germany; also specialty markets, e. g., in USA and UAE | CustomersFood sector: food industry; Non-food sector: paper, textile, construction chemicals, pharmaceutical, cosmetics and petroleum industries; Feed sector: feed industry | Special strengthsGMO-free and strong organic focus |
The Starch segment had revenue of € 1,148.7 million in the 2023|24 financial year. This was 11.2% below the value of the year before, in which the war in Ukraine led to powerful increases in market prices. The year under review saw a gradual normalisation in starch market prices due to fallen energy and raw material prices, with an impact on the sales pricing of most of the starch product portfolio. The volume-driven impacts were about equal to the price effects. In the ethanol business, sales prices are based on Platts price assessments. The volatility in ethanol markets seen in the financial year was once again extreme. The year’s average price of € 741 per cubic metre was approximately one-quarter less than one year earlier. Revenue from by-products (including the subcategory “other products”) followed raw material prices downward, with the decline in selling prices of high-protein by-products only occurring after a time lag. The Starch segment’s share of Group revenue was 30.3% (prior year: 35.6%).
At € 50.4 million, EBIT in the Starch segment was down significantly from the previous year. One of the main reasons was that AGRANA’s share of the earnings result of the equity-accounted HUNGRANA group dropped very significantly to € 1.9 million (prior year: € 11.0 million). Both margins and volumes were a factor in the performance of this Hungarian joint venture: It purchased raw materials and energy at high prices and was not able to pass these significantly increased costs on to customers sufficiently through adjusted sales prices; meanwhile, a significant decline in sales volumes led to underutilisation of capacity. It was primarily the low margins of the ethanol business, which were due to significantly lower Platts prices, that weighed on the Starch segment’s earnings measure “operating profit before exceptional items and results of equity-accounted joint ventures”. From the financial fourth quarter of 2023|24, starch products, too, saw declining margins owing to the greater downward pressure on sales prices in the market.
Further details on the results of the Starch business are provided in the segment report in the full version of the annual report.
The 2023|24 financial year was affected by multiple crises, including the war in Ukraine and the conflict in the Middle East. The European starch market contracted for the second year in succession.
A significant decline in market demand was observed in all product segments, particularly in the first half of 2023|24. Consumption was generally lower and surpluses from the previous years were utilised. Customers were also more reluctant to place orders in anticipation of falling raw material and energy prices. The main objective for all competitors in the starch business was therefore to secure market share as well as possible, which in the prevailing environment led to price pressure.
In the food sector, sales of native and modified starches regrouped at a lower but largely steady level until the end of the 2023 calendar year. In contrast, the organics business became significantly more difficult due to a consumption-related decline caused by inflation. This has a particularly significant impact on AGRANA Stärke GmbH, as it is very strongly positioned in the organic market.
Throughout the financial year, significant declines and fluctuations in sales volumes were seen in the paper and packaging market segment, which were due to customers scaling back production at their plants for sales volume reasons. The construction industry recorded an especially significant slump in business. Sales volumes of construction starch and starch derivatives for gluing paper bags were about 30% lower than in the previous year. A market recovery in this area is not foreseeable in the short term.
In the infant formula market, overcapacity and the reduction of safety stocks translated into declining sales. Customers do not expect business to pick up here until the second half of the 2024 calendar year. AGRANA will continue its consistent focus on the development of infant products for the premium segment.
Fuel ethanol prices declined significantly in 2023|24 from the previous year as a result of high imports from Brazil and the USA. Discussions and differences in interpretation between the European Commission and the EU member states about applicable emission factors for agricultural raw materials, which have implications for the amounts of greenhouse gas savings ascribed to ethanol, temporarily led to a high degree of uncertainty in the market. Demand for fuels in Europe was generally good, particularly in Austria, where the introduction of E10 provided an additional boost and a record volume of ethanol was sold on the domestic market.
On 31 October 2023, the amendment to the Renewable Energy Directive (now RED III) was published in the Official Journal. In it the EU specifies how renewable energy is to be further expanded.
RED III plays a key role in realising the goals of the Green Deal – climate neutrality by 2050 and a reduction in net greenhouse gas emissions by 2030. RED III not only raises the EU targets for the renewable energy share. It also aims to shorten approval procedures for the expansion of renewable power generating plants, grids and energy storage systems. This also means that some of the temporary acceleration requirements for approval procedures adopted at the end of 2022 under the EU Emergency Regulation will be permanently transposed into European law.
RED III entered into force on 20 November 2023. By 21 May 2025, the member states must implement most of the requirements of the directive nationally in the areas of transport, industry, buildings, and heating and cooling.
In 2023, E10 was gradually introduced in Austria in order to make a key contribution to the greenhouse gas reduction target.
The EU decision of October 2022 to end new registrations of vehicles with internal combustion engines as of 2035 was noted by AGRANA, but according to current assessments does not pose a relevant risk to bioethanol production. Not only is bioethanol just one of several products made under the circular economy concept of the biorefinery in Pischelsdorf, Austria, but amid the phase-out of fossil products, bioethanol will find uses beyond that in fuels.
World grain production in the 2023/24 grain marketing year (1 July to 30 June) is estimated1 by the International Grains Council (IGC) at 2,304 million tonnes, which is slightly above the prior year’s level of 2,268 million tonnes, but also marginally below expected consumption of 2,306 million tonnes. Global wheat production is forecast at 789 million tonnes (prior year: 803 million tonnes), slightly below expected consumption of 803 million tonnes (prior year: 795 million tonnes). The world’s corn production is projected at 1,227 million tonnes (prior year: 1,163 million tonnes) and the predicted consumption of corn is 1,212 million tonnes (prior year: 1,179 million tonnes). Total ending grain stocks are estimated to decrease by about 3 million tonnes to a new balance of 599 million tonnes.
Since the beginning of the 2023|24 financial year, grain commodity prices have moved downward (with the exception of two counter-movements for wheat in summer and autumn 2023), with prices falling significantly by the end of 2023|24. These price declines on commodity exchanges were caused by lower demand, an absence of further escalations of war in Ukraine, agreed export corridors from Ukraine, large harvests in important production regions, and the competition for export volumes. At the balance sheet date of 29 February 2024, on Euronext Paris, wheat quoted at € 191 per tonne and corn was at € 178 per tonne (year earlier: € 274 per tonne for wheat and € 279 for corn).
1 Estimate from 14 March 2024.
In the 2023|24 campaign, the potato starch factory in Gmünd, Austria, processed about 170,600 tonnes of starch potatoes (prior year: 217,000 tonnes). The processed volume of food potatoes for the production of long-life potato products also was below that of the prior year. Unfavourable growing conditions led to lower yields for both starch and table potatoes.
In 2023|24, AGRANA Stärke GmbH processed approximately 26% less corn (maize) at the Austrian sites in Aschach and Pischelsdorf than in the year before. The share of specialty corn (primarily waxy corn and organic corn) was about 24%.
Wheat milling volume at the Pischelsdorf facility for the production of wheat starch and bioethanol was up slightly in 2023|24 from the previous year. Through delivery contracts concluded with growers in advance, AGRANA also secured ethanol wheat.
1 Estimate from 14 March 2024.
At the two Austrian locations, a total of about 1.33 million tonnes of corn and other cereals was processed in the financial year.
In 2023|24, the HUNGRANA facility in Hungary was not able to duplicate its corn milling volume of the year before. The plant in Romania also processed less yellow corn, while its processing volume of specialty corn remained constant.
The Starch segment invested € 42.1 million during the 2023|24 financial year (prior year: € 31.0 million). The following projects were carried out among others:
Additionally, € 29.6 million (prior year: € 20.9 million) was invested in 2023|24 in the HUNGRANA companies (stated at 100% of the amounts for these equity-accounted joint ventures).
