Results in 2018

Royal Cosun had a disappointing financial year in 2018. Its operating profit fell sharply on slightly lower turnover. Weak sugar prices placed pressure on Suiker Unie’s profit for the year, and therefore on Cosun’s. All the other business groups made a positive contribution to the result.

Cosun realised a lower turnover and a substantially lower profit in 2018 than in 2017. Suiker Unie’s results, and thus Cosun’s, were depressed by low sugar prices. All the other business groups made a positive contribution to the result. Owing to the low beet prices and disappointing crop yield, 2018 was not a good year for our beet growers.
Operating profit including non-recurring items came to EUR 1 million (2017: EUR 108 million). Recurring EBITDA (earnings before interest, tax, depreciation and amortisation, excluding non-recurring items) is EUR 142 million, in comparison with EUR 198 million in 2017.

Investments amounted to EUR 128 million (2017: EUR 187 million).

Suiker Unie invested less than in previous years as the programme to increase the capacity of its factories had been brought to its conclusion in 2017. In 2018, it invested in increasing storage capacity for molasses in Vierverlaten, additional thick juice storage in Anklam (Germany) and additional biogas production.

Aviko invested in additional freezing capacity at Steenderen and Rain (Germany). These projects will continue into 2019. Investments were also made to increase Rixona’s water treatment capacity in Venray. Duynie is building a new ingredients factory in Cuijk that will use residual heat to dry ingredients for the pet food industry. Other investments related chiefly to replacement projects at all business groups.

Balance total
Click here for the consolidated balance sheet 2018

Total assets declined to € 1,811 million in 2018 (2017: € 1,901 million). The negative cash flow reduced the cash position by € 95 million. Owing to the lower profit for the year, group equity was fractionally lower at € 1,245 million (2017: € 1,250 million). Group equity was equal to 69% of total assets as at 31 December 2018 and was higher than a year earlier. Group equity remained virtually unchanged but total assets were lower. The group maintained its strong financing position. As the result for 2019 will also come under pressure from low sugar prices, we expect a further reduction in the cash position in 2019.

The members’ bonus is that part of the profit that is paid to members in the quota beet price. It totalled EUR 14 million in 2018.

The basic price for quota beet was set at € 32.50 per tonne, and the members’ bonus at € 2.25 per tonne. On balance, the price paid to members for quota beet with 17% sugar content and an extractability rate of 91 therefore amounted to € 34.75. The price paid for quota beet with average sugar content and average extractability was € 35.59 (2017: € 45.65). The volume of quota beet was 7% lower at 6.3 million tonnes.

At 13.2 tonnes, the average sugar yield per hectare was significantly lower than in 2017 (15.5 tonnes).

The average financial yield per Dutch beet grower was € 2,667 per hectare. This is € 1,374 (34%) lower than in the previous year as both the yield per hectare (tonnes of beet per hectare) and the price paid per tonne were lower.

The volatility of prices for agricultural products is a major determinant of Cosun’s results. The decline in European sugar prices in 2018 will continue to have an impact on the result for 2019. Suiker Unie is therefore expected to report an even bigger loss than in 2018.
Given the projected shortfall in the sugar production and consumption balance and the decline in the area under beet in the European Union, the long-term outlook is for a recovery in sugar prices and thus in the result. We are in a strong competitive position thanks to the economies of scale afforded by our factories and our growers’ high average yields per hectare. We expect Aviko to achieve virtually the same result. High European spot prices for potatoes will underpin an increase in selling prices. Sales, however, will be slightly lower on account of the divestment of our share in the joint venture in China and the disappointing potato harvest. We expect the other activities to realise a modest increase in their results.

SVZ should see a recovery in its result for 2019 as harvest conditions return to normal. We expect Sensus and Duynie to report a slightly higher result. On the whole, we expect Cosun’s profit for 2019 to be lower than that for 2018, chiefly on account of the lower result on sugar.

Our financial position remains healthy. Cosun will continue to invest in strengthening its position in the various markets it serves. We will invest in organic growth, including efficiency gains and innovation, and will make strategic acquisitions where possible. We expect the number of employees to remain stable.