| Marketing relationshipB2B and B2C | ProductsSugars and sugar specialty products, by-products (feedstuffs and fertilisers) | Raw materials processedSugar beet, and raw sugar from sugar cane |
| Key marketsAustria, Hungary, Romania, Czech Republic, Slovakia, Bosnia and Herzegovina (Western Balkans region), Bulgaria | CustomersDownstream manufacturers (particularly confectionery, beverage and fermentation industries), food resellers (for consumer products) | Special strengthsHigh product quality standards; product offering tailored to customer needs |
In 2022|23, revenue in the Sugar segment rose by a substantial 34.6% to € 861.7 million. This growth was driven by a significant increase in sugar selling prices. The sales price trajectory was very positive, above all in the reseller business (i.e., with wholesalers and retailers), but also in the industrial market; the upward price trend has? continued to strengthen since the new customer contracts took effect at the start of the 2022|23 sugar marketing year (1 October 2022). Revenue from by-products (especially dried beet pulp) increased very significantly as a result of the price correlation with agricultural commodities. The Sugar segment generated 23.7% of the Group’s revenue (prior year: 22.1%).
Sugar EBIT of € 46.6 million marked a pronounced improvement from the double-digit loss of the year-earlier period. This was due to significantly increased margins thanks to the improved sales price environment. Higher costs of raw materials and energy were more than made up for. In the 2022 campaign, beet sugar production was down markedly in every country, although the impact of this on capacity utilisation was partly offset by a strong increase in processing of raw sugar especially in Romania and, to a lesser extent, in Hungary. The profit contribution of the equity-accounted AGRANA-STUDEN group was € 9.9 million, much higher than the previous year’s € 1.9 million. The unusually high earnings of the AGRANA-STUDEN group, the best in its history, were explained by the positive trend in sugar sales prices and a higher processing volume at the refinery in Brcko in Bosnia and Herzegovina. The AGRANA Group’s share of the result of the Vienna-based Beta Pura GmbH was a loss of € 2.3 million (prior year: loss of € 7.6 million). The positive net exceptional items of € 0.9 million were related to recoveries from ongoing tax proceedings in Romania.
Very high levels of uncertainty and volatility prevailed in the sugar market, as in all other commodity markets.
In its April 2023 estimate of the world sugar balance, the market research company S&P Global predicted a deficit of 3.5 million tonnes of sugar – and thus a third deficit year in succession – for the sugar marketing year (SMY) 2021|22, which ran from 1 October 2021 to 30 September 2022. Despite rising production, this meant a further reduction in sugar stocks given the also rising world sugar consumption.
World sugar balance1 | 2023|24 | 2022|23 | 2021|22 |
|---|---|---|---|
| Million tonnes, except % | |||
| Opening stocks | 65.5 | 65.5 | 68.9 |
| Production | 191.4 | 187.8 | 184.5 |
| Consumption | (189.9) | (187.5) | (186.0) |
| Net exports/imports | (0.9) | (0.3) | (1.9) |
| Closing stocks | 66.1 | 65.5 | 65.5 |
| In % of consumption | 34.8 | 34.9 | 35.2 |
For the new SMY 2022|23, which began on 1 October 2022, S&P Global expects world sugar supply and demand to be in balance. For the coming SMY 2023|24, an initial estimate is projecting only a small surplus of 0.7 million tons. With predicted further growth in production and consumption, the ratio of stocks to consumption is forecast to remain low, at 34.8%.
Asia will continue to be the world’s top sugar-producing region, followed by South America and Europe. Key determinants of the global supply situation are the production volumes and export capacity of Brazil and India.
The start of the war in Ukraine pushed up sugar quotations in the world market. Throughout the 2022|23 financial year, sugar prices quoted at a high absolute level amid increased volatility and were also affected by inflation, especially the high energy costs.
At the end of the year under review, white sugar quoted at US$ 562.4 per tonne and raw sugar stood at US$ 486.8 (year earlier: US$ 496.0 and US$ 396.8 per tonne, respectively).
1 IHS Markit (formerly F.O. Licht); estimate of the World Sugar Balance, dated 17 January 2023.
In the 2021|22 sugar marketing year, sugar production in the EU-27 countries was 16.6 million tonnes, with a further slight reduction in planting area but increased yields per hectare. For the current 2022|23 sugar marketing year, the European Commission in its March 2023 forecast predicts a further reduction in acreage. As a result of the drought in important growing regions, the Commission also expects lower yields per hectare, leading to a decline in sugar production to 15.0 million tonnes. It can thus be assumed that sugar imports will continue to be needed to supply the EU.
According to EU price reporting, the average white sugar price in the EU reached € 512 per tonne in September 2022, at the end of the 2021|22 sugar marketing year, up by € 104 per tonne from September 2021. At the beginning of the new SMY 2022|23, the price rose significantly further. For February 2023 it was € 804 per tonne. Within the EU, there were significant regional price differences between the deficit and surplus regions.
Most analyst houses expect EU market prices to continue to rise sharply in the coming weeks and months or remain high in absolute terms, as, besides the relationship between supply and demand in the EU, adjusted selling prices will also have to reflect sugar producers’ increased production costs (notably for energy and beet).
The EU is in negotiations with various countries (such as Australia) and country groups over possible free trade agreements. Should sugar and sugar-containing goods not be grouped as sensitive products (contrary to existing trade practice), additional volumes of sugar could in future be imported into the EU with preferential tariff treatment.
The ratification process for the Mercosur agreement continues. The agreement will only take effect once the Council of the European Union, the European Parliament and all 27 EU member states have given their approval. Following the change of government in Brazil, renewed efforts are currently underway to implement the agreement soon, with added conditions regarding climate protection.
The area planted to sugar beet by the approximately 5,300 AGRANA contract farmers (prior year: approximately 5,800) in the 2022|23 sugar marketing year was about 72,000 hectares, a reduction from the prior year’s 86,000 hectares. Growing conditions in July and August 2022 were very dry. Only in select areas, in the Upper Austria and western Lower Austria provinces as well as the beet catchment area of the Czech sugar plant in Opava, was precipitation adequate in the summer. The second half of the growing season brought a cool, damp September and a dry October. The cool temperatures in September were largely what led to a lower sugar content than one year earlier.
Cercospora leaf spot disease caused localised problems in the westerly, more humid areas. However, more significant crop losses were prevented through the by now high proportion of varieties resistant to leaf disease. Due to mild temperatures in May 2022, the incidence of beet weevil was up again from the previous year’s level, leading to problems and the turning under of some acreages in the affected regions (Austria’s northern Tulln Basin and parts of the country’s Weinviertel area). With the precipitation which set in regionally over the autumn months, some of the beet harvest took place in wet conditions, which was reflected in higher deductions on beet prices compared to the previous year.
The growing conditions described were the crucial reason for a below-average sugar content of 16.1% (prior year: 17.2%). Around 4.7 million tonnes of sugar beet (prior year: 5.7 million tonnes) were harvested from a total area of about 72,000 hectares, corresponding to an average yield of 66 tonnes per hectare (prior year: 67 tonnes per hectare).
AGRANA’s seven beet sugar factories processed a combined daily average of slightly more than 47,800 tonnes of beet during the campaign (prior year: 49,700 tonnes). As a result of the lower beet quantity, in a campaign averaging a length of 101 days (prior year: 115 days), the factories produced a total of about 717,000 tonnes of conventional sugar (prior year: 850 thousand tonnes). Additionally, at the plant in Tulln, Austria, slightly more than 5,000 tonnes of organic sugar was produced in a one-week organic campaign. Due to the volume of beet processed, the average capacity utilisation of the sugar factories was 85% (prior year: 95%).
At the plant in Tulln, a molasses desugarisation facility was operated year-round (except for business-related interruptions). AGRANA also operates two raw sugar refineries, in Bosnia and Herzegovina and in Romania; in the 2022|23 financial year, these produced a total of 290,000 tonnes of white sugar (prior year: 208,000 tonnes).
On 19 January 2023, after a lawsuit by an environmental protection organisation in Belgium, the European Court of Justice ruled that, in future, sugar beet seed may no longer be treated with neonicotinoids. On 14 February 2023, it was decided for Austria that no emergency exemptions for neonicotinoid would be granted for the 2023 crop year. AGRANA and the beet growers are working hard on alternative pest control solutions, especially for the beet weevil. In the Czech Republic, Slovakia, Hungary and Romania, valid emergency exemptions apply for the use of neonicotinoids in the 2023 crop year.
In the Sugar segment, AGRANA invested € 34.3 million (prior year: € 20.7 million) during the 2022|23 financial year, primarily for the following projects:
Additionally in 2022|23, € 1.5 million (prior year: € 2.2 million) was invested in the equity-accounted joint ventures (the AGRANA-STUDEN group and Beta Pura GmbH; values for these entities are stated at 100% of the total).
