AGRANA Beteiligungs-Aktiengesellschaft (AGR) Earnings Call Transcript & Summary

Ladies and gentlemen, thank you for standing by. I'm Natalie, your Chorus Call operator. Welcome, and thank you for joining the AGRANA conference call on the results for the first half of 2021/2022. [Operator Instructions] I would now like to turn the conference over to Hannes Haider, responsible for Investor Relations. Please go ahead.

Good morning, ladies and gentlemen, and welcome to our conference call presenting the results for the first half '21, '22. With us today are 3 out of 4 members of the Management Board. Our CEO, Markus Muhleisen, will start the presentation with an overview on the highlights of the first half this year. Then he will comment on the market environment in all 3 segments. Our CTO, Norbert Harringer, will afterwards present to you what is going on in the group regarding raw materials and production. He will also provide you with an investment overview and CapEx outlook. And finally, our CFO, Stephan Buttner, will report on the half year results in detail. And he will conclude with an outlook for the full business year. As announced in our invitation, a presentation is available in reference to our call. You can find this presentation in the IR section of our website. The presentation will take about 30 minutes, afterwards, the management Board will be glad to answer your questions. And now I may pass over to our CEO, Markus Muhleisen.

Well, thank you, Hannes, and good morning to everyone. It has been an interesting first half, and let me start with the main message for today's conference call, which is, that despite an extremely volatile business environment, we are reconfirming our guidance for the full year, which is to exceed our profits by 10% or more. As you know, commodity markets have so dramatically, over the last several months, some of the agricultural commodities to levels of 30% to 50% above those a year ago. We've also all seen the impact of higher energy costs, and those are weighing on our earnings in all of our business segments. We are also continuing to see the impact of the corona pandemic on all of our segments, and we do see that continuing for the rest of the year and into next year. And as a result, we do see continued volatility in markets, both on the purchasing side as well as on the sales side. And while we do feel confident that we will manage through those challenges really well, it will continue to demand our full attention and careful management. We've already taken steps in the past quarters to deal with these challenges and to pass on price increases that we see in the procurement side as well as higher production costs in our sales prices, but it will continue to be a very volatile market. We do feel good about the partnerships we have in place, and so that gives us confidence for this year. Now you've seen the numbers already for the first half, and Stephan will take us through the details in a little bit. Just to cover off a few highlights, this is on Page 3 of our presentation. With sort of an unplanned Q2, our sales in the first half grew 8.8% to EUR 1.424 billion. Our EBIT for the second quarter also came in pretty much on plan, and our EBIT for the first half, therefore, is EUR 44.8 million. This, of course, is down from last year. We anticipated that, and I think we have already spoken about that in the last conference call. And what we now should see is successively an improvement period-on-period for the rest of the year. Stephan will take you a little bit more through how do we see the rest of the year by quarter, what to expect there. And also Norbert will give you in his section an idea of how raw material costs and energy costs that are impacting our business. Our EBIT margin in the first half was 3.1% and our profit for the period, EUR 27.1 million. And then turning to the next page. I can report to you that the CEO transition is going well and what we already discussed in our last call that I do see AGRANA is quite well positioned with our diversified portfolio with the 3 segments of Fruit, Starch and Sugar. What have done now quite intensely over the last few months is not only look closely at the numbers and the different businesses, but also speaking with a lot of our customers, speaking with our business partners. And we do see good growth opportunities in all of our segments as we're now looking to forward in how do we want to shape the next chapter in our company's development, the sort of 5 areas that you see here on Page 4 laid out, areas that we're diving into. And we've already spoken about those a bit on the last call. We will continue to work on those, and we'll obviously share news as we go along. And then just to give you a sense of how we're approaching this, we do expect them to have a fuller discussion with you on strategy and also changes that we're looking to make probably more towards the June time frame of next year, okay? So that just gives you a sense of how we're approaching that. Now turning to the market environment. And again, Norbert will give you also a sense more from the commodity side, but from the sort of demand side on the Fruit segment. This is on Page 6. We actually see some good developments there in fruit preparations, the key trends of naturalness, health, pleasure, convenience and sustainability continue to do well. However, we're also seeing now a bit of a difference in markets due to the COVID-19 pandemic. While the markets in North America and Europe are very much driven by the trends I just highlighted in the markets in South America, Asia and Africa, we do see much more focus now on affordability. And so we're working very closely with our customers to see how we can help them on the one side in those markets where it's about added value and naturalness, how we can give them the right support while, on the other hand, in those markets, where affordability is now taking a much bigger focus, how do we work there. In fruit juices, we do see that it's been a good summer. We've had a lot of good call-offs of our products throughout the summer. Also, our juice -- berry juice concentrates have developed well. We've had a good campaign there, and we're in the middle of a good campaign for apples. And as I mentioned, Norbert will cover our raw materials a bit more in detail in a moment. Turning to Starch. There, we do see a big impact by corona on the various segments. And just to highlight a few, so packaging paper is showing continued growth due to the extremely high demand in online commerce. And what we're seeing here is that our customers that have significant capacities in graphic paper are now looking at converting that capacity to the production of corrugated board. And that, in turn, has been driving further demand for storage. On the other hand, infant formula has been a bit more challenging. There, what we're seeing is a particular demand in the Chinese market being served by more -- by domestic producers, resulting in a lot less imports from Europe. In the liquids saccharification products segment, there, we saw a big uptick in consumption and demand in the summer months. However, that market continues to be very challenging from a margin perspective as there's a lot of installed capacity, and that is limiting also the ability to price up as the energy and raw material costs are going up. Then ethanol, you probably have followed that very closely. As you know, ethanol and fuel is showing very strong momentum. On Chart 8, you're seeing developments in the recent months. And so we are certainly well positioned to benefit from strong ethanol prices. Then turning to the Sugar segment. Here, what we're seeing is that on the world sugar market, then after that, low in March, April of last year of 2020, sugar prices have risen steadily worldwide. This has been supported by developments such as some more limited availability of Indian raw sugar exports as well as less of seasonal harvest in Brazil. And at the same time, return of consumer demand worldwide. And so what we're seeing right now is that the world sugar balance should be balanced and maybe projecting even a slight production deficit, and that then should also help the EU sugar market. In the EU specifically, we will see we're projecting a decrease in sugar production in the EU 27. And as a result, we are assuming that sugar prices will continue to do well. And you see price development more detailed on Slide 10. So overall, the pricing environment for sugar is good. What we do see also is, of course, sugar continuing to be challenged in terms of consumer perception. So that is an ongoing topic that we have to face into. But certainly, what we are seeing in our sugar prices and then the EU prices, which you also see on Slide 12, we see a recovery. And so with that, let me now turn it over to Norbert for focus on ESG and raw materials. Norbert?

Yes. Thank you, Markus. Good morning also from my side and a very warm welcome to our conference call. Let me start with a reminder on our focus on ESG. AGRANA sustainability is an integral aspect of its business activities. I would like you to remind of the first interim target of our climate strategy to reduce by 25%, our carbon dioxide emissions, until '25/'26 from 928,000 tonnes in our base year 2019. Annual investments of about EUR 10 million will be necessary. The following measures are planned and partially already implemented: The use of green electricity; the coal phase-out at the last 2 coal-fired sugar production sites in Sered' in this year and in Opava in 2025; the implementation of energy efficiency measures in all of our factories worldwide; the increased use of residual low-protein raw materials and biomass for energy in stages from 2025 onwards. We started in this year, in June '21, a project for structured capture of Scope 3 emissions along the whole value chain. We are developing reduction measures together with our suppliers and partners until 2030 at the latest in order to be able to offer largely carbon dioxide neutral products. And we joined, in July 2021, the science-based targets initiatives and will set corresponding climate targets within the next 24 months. Let me now come to an overview on operations, starting with the situation on the raw material markets. For the fruit preparation business, the harvest of strawberry, our principal fruit, was completed in July in all relevant procurement markets. The planned volume requirement was fully contracted in production regions with Mediterranean climate zones such as Egypt, Morocco, Spain, at slightly lower prices than last year. In Mexico, the foremost sourcing country, the prior year's volume was surpassed. As a result of reduced planting acreage and weather-induced unfavorable growing conditions, the strawberry quantities in China were down significantly year-on-year. The availability of raspberries as a raw material was below normal for the third consecutive year with substantial price hikes of more than 100% compared to the prior year period. Reasons for this were repeated weather-related poor harvest in Serbia and in North America and sustained high demand from the fresh market and the frozen fruit retail segment. Both factors led to historic low inventories in order to be able to cover primarily the European requirements, raspberries were purchased largely in Ukraine where prices were below the levels in Serbia and in Poland. The global peach harvest was significantly lower than in the past few years. Frost damage in Greece and Spain and inclement weather in China, the most important producer country, led to below average yields and thus, to considerable price increases. The forecast for the harvest is still underway for wild and cultivated blueberries in Eastern Europe and in North America. The top purchasing regions point to rising prices compared to the last year. To secure the amounts needed, AGRANA is also buying this fruit in alternative procurement regions like Peru and Morocco. In the first half of this business year, about 189,000 tons of raw materials were purchased for the fruit preparation business. In the fruit juice concentrate activities, AGRANA was able to process greater volumes than in the prior year, thanks to good availability of raspberries. For apples, the principal fruit in the juice concentrate business, good raw material availability is expected in the main crop production regions. Let me now switch to our Starch segment. The receiving of freshly harvested wet corn at our corn starch plant in Aschach in Austria began in the middle of September of this year. Wet corn volume of about 120,000 to 130,000 tonnes is expected to be received comparable to the prior year, and its processing should be completed until mid of December. Processing will then switch to the use of dry coal. In the first half of this business year, approximately 247,000 tonnes of corn was processed in Aschach. This is a difference of plus 13,000 tonnes compared with the prior year. In the raw materials for the integrated biorefinery in Pischelsdorf here in Austria, in the first half of this business year, AGRANA used noncorn grains like wheat, organic wheat and [indiscernible] and corn in a ratio of approximately 5:1. The total processing volume at this facility in the first 6 months of the financial year was about 551,000 tonnes. This is at about 90,000 tonnes more than in the same period of the last year. Processing of that corn, wheat and also in the middle of September this year, wet corn receiving volume of about 85,000 to 90,000 tonnes is expected roughly, similar to the last year with processing likely also to be completed by mid of December. The purchasing of feedstock for the plant in Aschach and Pischelsdorf from 2020 crop is completed. Including the amount contracted from the '21 harvest, approximately 75% of the raw material supply toward this business year is secured. The start of the wet corn campaign at the equity accounted plant, HUNGRANA in Hungary, occurred in early September 2021. The projection is for a wet corn processing volume similar to last year's, which was 250,000 tonnes. In the first half of this business year, some 557,000 tonnes of corn were processed at HUNGRANA. Now some words about potatoes. On the 2nd of September in this year, the potato starch factory in Gmünd here in Austria began the processing of such potatoes from the '21 harvest. Thanks to the favorable weather conditions during the growing season, contract fulfillment by the growers is expected to reach 100% to 105% of the contracted amount of starch potatoes. The average starch content will be about 18.5% to 19%, similar to last year's. Ladies and gentlemen, the wheat and corn quotations on Maize in Paris rose significantly since the beginning of this year. A combination of strong demand for corn and grains and weaker harvest due to the weather extremes in key production areas was responsible for these price gains and increased volatility. At the quarterly balance sheet date, the quotations were around EUR 220 per tonne for corn and EUR 249 per tonne for wheat. In the year earlier, this was EUR 167 per tonne for corn and EUR 188 per tonne for wheat, respectively. Let's come to our sugar beet. The area contracted by AGRANA with its growers for sugar beet production in the '21 crop year was about 87,000 hectares. In the prior year, we had around 86,000 hectares. Of this, about 2,100 hectares was dedicated to growing organic sugar beet. In Austria, the contracted area for beet production was expanded by above 13% and from the prior year to almost 39,000 hectares. Planting of the seed, which was delayed for weather reasons, began from early March and was completed by mid of April. After damage from night frost experienced at the beginning of April, ultimately, about 7,100 hectares of beet seeds were turned over, mainly in Slovakia, Hungary and Austria. However, almost all of this acreage was replanted to beet. The persistently cool and rainy weather, the deployment of pheromone traps and the effect of the neonicotinoid seeds dressing very sharply limited the activity of the beet weevil puree with this crop field. In view of the weather and the growing conditions to date, beet yields in Austria, the Czech Republic, Romania and Slovakia are likely to be above the average. In Hungary, below average yields are expected due to the summer seasonal crop. The AGRANA Group's actual area under sugar beet is currently nearly 86,000 hectares, including about 38,000 hectares in Austria. The beet campaigns at all factories started between the middle of September and the beginning of October '21. In addition, a thick juice campaign was underway at the Tulln plant in Austria since the 6th of September. At the raw sugar refineries in Bosnia and Herzegovina and Romania, about 175,000 tonnes of brown cane sugar were converted into some 169,000 tonnes of white sugar thus far in the '21/'22 financial year. At the plant in Tulln here in Austria, the molasses desugarization facilities operated year-round and crystallized betaine is also produced. Last but not least, ladies and gentlemen, some information about our investments within the group. In the first half of this financial year, we invested EUR 30.3 million or EUR 2.5 million more than in the year earlier comparative period. In addition to the regular project for product quality improvement, asset replacement and maintenance across all production sites, the following individual investments are worthy of note. In the Fruit segment, a new filling station in Mitry in France, a new construction of an application laboratory in our fruit concentrate factory in Dachang in China. In the Starch segment, measures to increase the specialty corn processing in Aschach, efficiency improvements to our spray drying equipment in Gmünd, the upgrading of the drum drying plant for the production of potato flakes also in Gmünd and the expansion of the company wastewater treatment plant in our potato sector in Gmünd. Important investments in the Sugar segment are conversion of the boiler plant at our site in Sered', in Slovakia from coal to natural gas as a matter of sustainability and the expansion of the process control system in Tulln in Austria. Additionally, in the first half of this business year, EUR 6.5 million were invested in the equity accounted joint ventures at HUNGRANA, STUDEN and Beta Pura. The total investment across the 3 business segments in this financial year at approximately EUR 95 million is to exceed the prior year's level, but will be significantly again below this year's budgeted depreciation of about EUR 120 million. Our short-term focus is on the implementation phase after the completion of major projects and capacity expansion in recent years. Ladies and gentlemen, I'm glad to hand over to Stephan Buttner to give us an overview on the financials.

Thank you, Norbert. So good morning, ladies and gentlemen. We start with an overview of the revenues by segment. So when we have a look at the Fruit segment, we see an increase of 5.3%, up to EUR 633.4 million revenue. While revenue in our juice concentrate activities declined slightly for price and volume reasons, our fruit preparations business saw revenue growth mainly from higher sales volumes, and this is especially in the regions North America, South America and Russia. In Starch, we saw a significant growth of 17.1% in our revenue that amounted to EUR 476.8 million versus EUR 407.2 million in the prior year. The main reasons there were higher sales volumes of our core products and byproducts, also the quotations, the Platts quotations for ethanol increased, thanks to higher demand in gasoline. In Sugar, we see an increase to EUR 314.2 million revenue. This is a plus of 4.6%, and this increase comes mainly from rising sugar selling prices and higher revenue from sales of beet seeds and other agricultural products. Let's have a look at the EBIT by segment. So here in the Fruit segment, we see a decrease from EUR 30.1 million in the prior year first half year down to EUR 25.8 million. This is a decrease of 14.3%. This decrease is mainly driven by a significant lower result in the juice business. And here, the main driver is our apple juice concentrate business, which was produced for higher prices from the core 2020, and we could not fully pass on these price increases in the raw materials section. In fruit prep, we saw a very solid performance, I would say, due to improved earnings and despite extraordinary expenses of EUR 2.3 million caused by damage claim and also reorganization measures. In Starch, also, we see a decline in EBIT by 16.4%, down to EUR 29 million. Main reason here is, of course, the increase in raw material prices, especially wheat and corn, but also energy prices. And there, we have a certain time lag in passing on this increase in prices to our customers. This is, of course, also due to our business model. And so here, we see this decrease in performance. This is also driven by lower earnings contribution of our joint equity consolidated joint venture of HUNGRANA, where the contribution here fell from EUR 9.6 million down to EUR 6.9 million in the first half of the business year. In Sugar, we have more or less same results, of course, from minus EUR 9 million in the previous year, down to minus EUR 10 million. Of course, we already mentioned this in -- after Q1 that we started with higher inventories, higher prices of our inventories, and therefore, cost of goods sold and therefore lower margins which affects the first half of the business year. And therefore, here, despite higher sugar selling prices, we see no improvement so far. Let's have a look at the consolidated income statement. So we already mentioned the revenue of EUR 1.424 billion in the first half of the business year, so an increase versus the prior year. EBITDA decreased from EUR 101.1 million down to EUR 94 million. Also, the share of results of equity accounted joint ventures dropped from EUR 8.9 million to EUR 6.1 million. Then we have these exceptional items of minus EUR 2.3 million, and therefore, an EBIT of EUR 44.8 million, which is a significant decrease versus the prior year. EBIT margin amounts to 3.1%. We have a slightly better performance in our net financial items, and therefore, the profit for the period is EUR 27.1 million, leading to an earnings per share of EUR 0.45. The net financial items, here we see an improvement, coming from minus EUR 9.1 million down to minus EUR 7.1 million. This is driven mainly by a better result in our currency translation differences down to EUR 2.1 million coming from minus EUR 3.4 million. The tax rate is 28.1%. So the increase from the 26.3% in the first half of the prior business year. This is mainly due to the earnings before tax in the various countries and the application of the respective tax rates in these countries. So there is no significant reason for this increase. The consolidated cash flow statement. Here, we see a net cash from operating activities of EUR 39.3 million. Of course, this is a decrease versus prior year where we had EUR 71.5 million. So you see the drivers here. Partly this is, of course, driven by the lower profit for the period, but also higher changes in working capital. The consolidated balance sheet, there, we see no significant change. So our total assets amount to EUR 2.458 billion. Our equity is still very stable with 53.8%. The net debt increased from EUR 443.5 million to EUR 485.8 million. This is mainly driven by the dividend payout, and therefore, the gearing that we see here is 36.7%. So still very solid. Let's come to the financial outlook. So despite the continuing substantial challenges arising from the COVID-19 pandemic and higher raw material and energy costs, the group's operating profit, so the EBIT for the full '21, '22 financial year is expected to see a significant increase. Group revenue is projected to show moderate growth. So we always want to point out that given the ongoing COVID-19 crisis and the associated strong volatility in all business segments, the forecast for the full year is subject to very high uncertainty. So for the third quarter of the business year '21, '22, we expect that this will be broadly in line with the results of the first -- the second quarter '21 and '22. So this means between EUR 20 million and EUR 25 million EBIT. The EBIT for the fourth quarter is to be -- is expected to be very significant above the prior year comparative period. Where is -- now let's come to the outlook for the segment. So as you can see, in Fruit, we expect a moderate increase in revenue and a significant improvement in our EBIT. In Starch, also, we expect moderate improvement or increase in revenue, but a significant decrease in EBIT. We already mentioned that this is mainly caused by the dramatic increase in raw material prices, but also energy costs. And in Sugar, so our guidance is a moderate increase in revenue, significant improvement in EBIT, whereas also here, we have to say that the recent significant increase in energy costs seem to be a big challenge also for the coming months. So this was the outlook for the financial year. Now I hand back to Hannes Haider, which will give you an information about the financial calendar.

Thanks. Before we go on with the Q&A session, I just wanted to inform you that our financial calendar for the next year was published recently, and all details are also available on our website. We will now go on with the Q&A session.

[Operator Instructions] The first question is from Mrs. Urbankova from Erste Bank. What is the expected impact of the climbing energy prices on AGRANA's first year '21/'22 operating results? Which business segment is expected to be mostly affected? Do you use hedging? If yes, to what extent?

Stephan, do you want to take the first one?

Yes, yes. Yes, thank you very much, Mrs. Urbankova for the questions. So yes, all the questions were related, I think, to our energy consumption and energy cost. So what we can say is that, of course, the businesses or, let's say, the divisions which have the highest consumption in energy is, of course, our sugar business and the starch business. Sugar, here, mainly, we use natural gas. Our consumption is around 1 million megawatt hours per year. In starch, we use also natural gas, also around 900,000 megawatt hours. But we also use a lot of electricity here, and this is an expected consumption of around 400,000 megawatt hours. Yes, of course, we also use hedging. We have a hedging strategy in place over the last years. Of course, it's always influenced by the respective business models. So in Sugar division, of course, we have a certain hedged volume of around 55% to 60% of our demand. And there, of course, also we see a heavy impact on our results in the actual business here. But of course, this also will depend on the volatility of the gas prices in the coming months, of course, because we have some purchases on the spot markets here. In starch, here, also, we have a coverage of around 75% from our gas consumption, and with electricity around 85%. But also there, we see an impact of the increase in energy prices on our results due to spot purchases. What is the isolated effect? This is difficult to tell because, of course, we see some price increases also on the sales side in the markets, as we already mentioned. We saw a significant increase in our Platts quotation. This is, of course, also driven by raw material prices and higher energy prices. So you cannot, let's say, isolate one thing from the other. But yes, of course, we see a significant impact on our cost in total from this increase in energy prices. And I would say, currently, from our -- from a current perspective, I would say, this could amount up to EUR 60 million.

We have another question from Ms. Urbankova. Do you expect AGRANA's Sugar segment operating result to end with at least a positive 0 this year? According to the latest Sugar guidance, EBIT in the Sugar segment is anticipated to reach EUR 0 to EUR 100 million.

Yes, so this one, Stephan, do you also want to answer?

Yes, yes. I will answer this. As I already mentioned, we have a significant impact of increasing energy prices here in the Sugar business. What we already mentioned as well is that we started with higher cost of goods sold in the actual financial year. So this also has a negative impact. Of course, it now also depends on the production campaigns in all of our countries where we have presence. But currently, caused by this massive increase in energy prices, I think that it will be very, very difficult to reach, let's say, 0 or slightly positive result. So currently, we do not really expect that.

[Operator Instructions] The next question is from the line of Bernd Maurer from RBI.

Two questions I do have. First, of course, back to the topic of input cost inflation. Going through the different segments and how contractor is structured, where do you -- are you most confident to pass on higher input costs rather in the short term? Where, for which products, you are rather locked in for, yes, [indiscernible] for the rest of the financial year. I think almost likely or even then till about 12 months from now on? So if we can get a bit a differentiation between the different segments and products where it's easier for you to pass on higher input prices and where not. That's point 1. And point 2, to the guidance. Perhaps you remember I asked you in the Q1 conference call if the significant EBIT increase you expect would also -- could be applied also for an adjusted result of last year. Your answer was yes. Would you confirm this comment now? Or would you say, hey, given the rise of input costs are at 10 -- and at least 10% increase on an adjusted result of 2021 is likely [indiscernible] and we should focus on the reported numbers of last year.

Stephan, you take the...

Take both or...

Yes, go for both, and I can add if you want to.

Yes. So Markus, if you want to correct me then, yes, please, afterwards, then do so. I would say, first question, where is it easier or not so easy to pass on in the short term the price increases? So let's -- I would say, let's start with the Sugar business here. Obviously, it's very difficult, yes. So you know that we contract most of our volumes, I would say, between August and, let's say, October. We have mainly yearly sales contracts here in place. And of course, it's very difficult to anticipate and what happened, especially with the gas prices in the last 1 or 2 weeks. So you can imagine that it's very difficult to pass this on. So of course, we have a certain percentage of our total sales volume which is not contracted yet. I would say it's around -- it amounts to around 20% of our total sales volume on the Sugar marketing year basis. But this, of course, will not be sufficient to compensate for this massive increase in energy prices. So here I see a certain time lag. And therefore, this is also the reason for what we already mentioned is that, of course, here, we see a significant impact on our results of the actual financial year but, of course, also influence our financial performance in the first half year '22/'23. in starch, I would say, okay, in the food -- in the food section, we also have mainly yearly contracts in place. So also there will be a certain time lag. But as there, we have a higher coverage in our energy prices, the impact would not be so dramatic. In ethanol, we have a high percentage of spot prices or spot business. There, of course, it's the easiest way to pass on the increasing prices. And I think this is also the reason why we see this high volatility in the quotation. And in the nonfood section, yes, there, is also a little bit easier because there we have more 3 to 6 month term contracts, I would say, with the clients. And of course, there also is a certain time lag, but it's not that significant as in the Sugar business or business in Starch. When we look into Fruit. In Fruit, energy consumption is not that much a problem because energy consumption is quite low. In our juice activities, we are fully hedged, so there is no impact to be expected and also, yes, raw material prices here, especially in the juice business, the main raw material is Apple, and there we see it's one of the very few raw materials where we see price decreases versus the last year. So -- and also with the berry juice concentrate, we had a good season '21 where we were able to pass on the prices already in our yearly contract. So there, we see no problem so far. And in the fruit prep business, of course, there, we also have, I would say, in most cases, yearly contracts, yes. But it differs, of course. Some are from crop-to-crop. Others are calendar-year basis. So there of course, we have a certain challenge in the actual financial year because also, as Norbert already mentioned, we saw a significant increase in certain raw material prices, especially when we look at peach, blueberry, but also raspberry. Of course, here, we have a certain, I would say, yes, shortage position in some of these raw materials versus our sales contract duration. This has an impact, but we are right now also here in negotiations for the contracts for the next year. So then we will hopefully, be able to pass on this increase in raw material prices, especially in the fruit prep business from January onwards. So we will have an impact during the next 3 or 4 months, but then, hopefully, we will see that we will be able to pass on these price increases further. So is this okay?

Yes, thank you for the comprehensive [ prep-up ]

Second question, the guidance. So yes, we were, of course, more optimistic when we started into the business year. And I remember your questions regarding our guidance on one hand versus the reported numbers of last year, on the other hand, when we take into consideration that we had exceptional items. So now I would say we would be more defensive on that. So our guidance now is more in the direction of at least plus 10% versus the reported numbers. So we cannot fully expect more because it's really a big, big, big challenge. And I think, as Markus already mentioned, we are doing quite well. But of course, we are not in a position where we can -- we can have a perfect match everywhere. We are not 100% hedged in energy prices. We have a time lag in passing on sales prices and so on. So it is really, really difficult and challenging in those times. And also many things are happening which could really not have been expected, yes.

Yes. No, got it. And perhaps as my line is open, one more question, if I may. Reading the report, going through the slides now in the call, everything with respect to the harvest and campaigns, you delivered quite an okay to even optimistic and positive picture. Is this take of mine correct, that practically no bigger headwinds you face from the, this harvest and campaign side?

Norbert, do you want to comment on that?

Yes, I think that this operational topic, you are integrated in a very good way. Yes, from the operational side, we do not see any bigger problems on the campaigns, on the [indiscernible] campaign and the sugar beet campaign. The topics of this year are deriving in the raw material prices and in the energy prices. These are our challenges.

The next question is from the line of Baptiste de Leudeville from Kepler.

My question is on Sugar business. I wonder if you have some visibility on the 2022 Sugar campaign. Usually your negotiations with the beet farmers is during August -- from August to October. So I guess it's over now or in the process of being over. So my question is, how do you -- can you confirm that you can take advantage of higher contracted price for the next year? And also that in terms of surface and volume with the beet producer. Do you have some good visibility on that?

You also couldn't clarify, are you talking about the contracts with the farmers? Or are you asking about the pricing with our customers?

I'm talking about on beet processing with beet farmers, yes.

Okay. So it's the -- so maybe, Norbert, you can talk about the contracts with the farmers.

Yes. Yes, we have in the contract negotiations with the farmers in our countries. This will last now from October to November, to the beginning of November. We are facing -- we are facing the need of rising the beet prices almost in the Eastern countries because of the situation on the raw material markets. But we think we will be able to maintain the beet harvest acreage of about 85,000 to 86,000 hectares for all of our countries at least.

[Operator Instructions] There are no further questions at this time. So I hand back to Hannes Haider for closing comments.

Yes. Thank you. As there are no further questions, thanks for participating in our call. We wish you a nice remaining day, and goodbye.