The long-term growth trends for AGRANA remain intact. The trend towards higher-quality, healthful nutrition and the rise in private consumption continue to be the growth drivers for the Sugar, Starch and Fruit segments. As well, the sales activities across segment boundaries are to be stepped up through selective cross-selling.
With its sound balance sheet structure at 28 February 2010, AGRANA is in a very good starting position for the 2010|11 financial year. Through structural improvements designed to have longlasting effects, AGRANA’s earnings situation in the current new financial year is to be consolidated and growth to be achieved on a selective basis. Even in the persistently volatile environment, the market position in the established markets is to be steadily strengthened.
2010|11 financial year: Group revenue expected at prior-year level, with positive effects in pre-exceptionals operating profit thanks to optimisation measures already taken.
AGRANA currently expects Group revenue for 2010|11 to remain steady at the 2009|10 level as a result of the lower sales prices. In the Sugar segment, quota sugar sales show a trend of limited growth as a consequence of the European production quota. With the production of non-quota sugar, AGRANA plans to ensure the full capacity utilisation of its sugar plants. For the refining operations in Romania and Bosnia-Herzegovina, the normalisation of the world market price for sugar and the elimination of the transition arrangement within the EU should help stabilise the sales situation. The market for commodity starch products is projected to grow at a business-cycle-related low rate in the single digits. By contrast, based on AGRANA’s internal estimates, double-digit growth is anticipated for the market for building products, bag adhesives, organic products and specialties. For AGRANA, the termination of the quota arrangement and decoupling for potato starch will in the medium term mean a contraction in the overall market. For isoglucose, growth is constrained by the quota. For the fruit preparations business, AGRANA sees the continuation of the positive volume trend. In addition to innovation-driven growth in established markets, the opening up of new markets such as the North African and Arab countries is being furthered by starting a joint venture in Egypt. For fruit juice concentrates, further volume growth is expected both in new regional markets and from an expanded product portfolio.
Operating profit before exceptional items can be expected to show the positive effect of the optimisation measures taken in 2010|11 and thus surpass the 2009|10 result. The improved purchasing strategy and the consistent rigorous cost management in all business areas are to contribute to consolidating the earnings situation. In the Sugar and Fruit segments, AGRANA foresees growth in operating profit before exceptional items, while the Starch segment will perform below the year-earlier level of profitability. The planned earnings improvement in the Sugar segment has its basis in good plant utilisation rates and further cost reductions. In the Starch segment, AGRANA expects moderately rising raw material prices. Most of the raw material supply required in the 2010|11 financial year has already been contractually secured until the beginning of the new 2010 harvest. With the expansion of the bioethanol industry’s production capacity in Europe, total bioethanol production in the European Union in 2010 is forecast to grow by about 18% from 2009, to approximately 7 million cubic metres. Demand could rise as a result of a legal requirement for petrol to contain up to 10% bioethanol from the end of 2010. In the raw material procurement for fruit preparations, AGRANA expects slightly rising input prices compared to the low levels of 2009. AGRANA also plans to increase its market share in Russia and progress the expansion of local production capacities there.
The risk management for AGRANA Juice was further improved and expanded in 2009|10, thus reducing the impact of extreme price swings on earnings. One way in which this is achieved is that, during the processing season, most of the apple juice concentrate produced is already sold to customers at a set price. For the 2010|11 financial year AGRANA expects normal harvest results for concentrate production and somewhat higher prices for raw materials and products from the new 2010 campaign.