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Statement CEO

CEO Johann Marihart

Johann Marihart
Chief Executive Officer

In terms of earnings, the year behind us was anything but satisfactory. Only the Fruit segment recorded slight EBIT growth in 2018|19.

Yet our gaze is not directed backwards but to the future. This is reflected in our programme of investment in growth projects in the Fruit segment and specialisation projects in the Starch segment. The expansion of the wheat starch plant in Pischelsdorf is the biggest project of the new financial year, and the enlarged facility is scheduled for commissioning at the end of 2019.

Regarding the earnings trend for the Group in 2019|20, we think the prices reported by the EU sugar price reporting system have already bottomed out. Depending on the crop production acreage and growing conditions in 2019, the world market price will have more or less of an impact on the 2019|20 sugar marketing year. Overall, in view of expected stable Starch EBIT and a projected further improvement in the Fruit segment, the Group’s earnings should see an upward trend.

You can find further information on these and other topics here in our online annual report.

Sincerely

Questions adressed to the CEO

1 Global warming is a “hot topic”, and not just in the past weeks and months. How is AGRANA responding to the increasingly urgent need to protect the climate and environment?

JM: The warming climate and long absences of precipitation are already having an impact on European agriculture and the processing industry, as the drought year 2018 has all too clearly shown.

We are responding to this by stepping up our research activities in the agricultural sector, in view also of the limited availability of crop protection products. The responsible use of agricultural resources is highly important to us – raw materials are too valuable not to be utilised completely. Current examples of this full utilisation are our new refining of pulp from potato processing and the construction of a betaine crystallisation plant for the complete utilisation of sugar beet molasses at our sugar factory in Tulln, Austria.

In addition to our careful use of raw materials, our products themselves make a substantial contribution to protecting the climate and the environment. Bioethanol as an environ-mentally friendly component of blended petrol, produced in our biorefinery in Pischelsdorf, Austria, reduces emissions such as CO2 and particulate matter. A further increase in the proportion of ethanol in petrol would be an immediate and effective way of further lowering these emissions. Bioethanol production also yields a high-quality protein animal feed, a by-product which reduces imports of genetically modified soy from overseas.

2Will AGRANA increase its focus on organic production in the future?

JM: As part of our specialties strategy, organics are an important cornerstone of our product range that makes us the largest European B2B organic starch and sugar producer. However, we also believe in the need for efficient agriculture with a wise balance of conventional and organic farming. With today’s consumption patterns, organic production alone cannot feed the world population, nor would it be able to withstand the pressure from pests. All our products require a secure raw material base in a competitive international environment.

3 Did the lower sugar production also lead to lower emissions?

JM: The AGRANA strategy of diversification across three pillars will prove its worth in 2018|19. Since 1 October 2017 there are no longer any quotas for the Sugar segment. Greater competition within Europe amid a more than adequately supplied EU market, higher world sugar stocks and lower world market prices led to massive downward pressure on prices and margins since the quota expiration. Besides the fact that we will meet the coming challenges through the expansion of our strong market position, a systematic brand-name product strategy and greater centralisation of administrative functions throughout the AGRANA Sugar segment, our diversification into three business segments will offer stability, as the Starch and Fruit segments provide solid support for the Group's earnings.

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