Outlook

For the 2011|12 financial year as well, AGRANA is projecting a positive earnings trend in all business segments. The long-term trends towards higher-quality, healthful nutrition remain as much a growth driver for AGRANA as the Group’s geographic expansion and the increasing focus on emerging markets.

The very good 2010|11 financial year will represent a challenging base against which to compare the Group’s performance in 2011|12. However, in view of the sound balance sheet structure at 28 February 2011 and the diversified business model, AGRANA believes it is well positioned for the 2011|12 financial year. Through the conscious use of inter-segment synergies in functions like purchasing, logistics, sales and finance, and with the help of steadily continuing structural improvements, the Group intends to master the challenges of persistent volatility in markets and is optimistic that it will achieve sustainable growth for the long term.

AGRANA currently expects Group revenue to increase slightly in 2011|12 thanks to mild overall volume growth and higher prices.

In the Sugar segment, growth within the EU is constrained by the Sugar market regime, but the production of Non-Quota Sugar should ensure the strong utilisation of the AGRANA Sugar plants, and the high world market prices for Sugar are likely to facilitate their exports. The tight Quota Sugar supply in the Romanian, Hungarian and Bulgarian markets augurs a small decline in volume. Likewise, Bosnia-Herzegovina and the neighbouring countries are dependent on the availability of Raw Sugar and thus on developments in the world market. Until the beginning of the new beet campaigns, AGRANA foresees a tight Sugar supply in the EU and also in the Western Balkans, which points to generally higher Sugar prices.

In the Starch segment, higher selling prices are expected to outweigh the effect of a slight decrease in sales volumes. The volume reduction expected especially in native starches and saccharification products is the result mainly of the relatively stronger running down of inventories at the beginning of the 2010|11 financial year. Isoglucose prices are also on the rise, tracking local Sugar prices.

In the Fruit segment, a revenue increase is predicted for the fruit preparations side amid rising volumes coupled with higher selling prices. The rate of volume gains here should exceed the forecast market growth. Revenue in fruit juice concentrates is likely to grow significantly amid the expected price trend in the concentrate market as a direct result of the higher raw material costs in the 2010 Campaign. Additional growth will come from the planned merger with Ybbstaler Fruit Austria GmbH, although its effective date will probably not be until late autumn 2011.

The objective for 2011|12 is to further raise Group operat- ing profit before exceptional items. Ongoing improvements in purchasing strategies and in cost management, as well as targeted further savings in energy consumption, are to have benefits for profitability.

Last year’s positive earnings trend in the Sugar segment should continue in the 2011|12 financial year. This expectation is reinforced by the favourable price developments in recent weeks and the steps taken to control costs and safeguard sales volumes. The widened margins on beet Sugar are likely to more than offset a reduced earnings contribution from the Refining operations, thus permitting a further increase in Sugar’s pre-exceptionals operating profit.

Much of the Starch segment’s raw material supply for the 2011|12 financial year is already contractually secured until the new 2011 crop, in terms of corn for the Aschach plant and wheat, corn and Triticale for Pischelsdorf. With the projected expansion in areas planted to wheat and corn, the price trend is expected to be stable. Starch segment operating profit before exceptional items is forecast to be slightly higher than in 2010|11; a big challenge, like last year, will again be dealing with raw material and energy costs that are stabilising at a higher level.

In the Fruit segment, a further rise in operating profit before exceptionals is expected for the fruit preparations business. In connection with possible increases in raw material costs, the calculations for the segment also include the possibility of movement in market prices. On balance, the percentage profit margin for fruit preparations is predicted to ease some­what because of disproportionately stronger growth in the trading business (merchandise purchased for resale), which has lower margins. The concentrate operations expect substantial earnings growth for 2011|12, as higher concentrate prices were negotiated in the contracts from the 2010 Campaign. On the cost side, the savings measures of the past years are being continued.