Südzucker AG (SZU) Earnings Call Transcript & Summary

Thank you, and good morning, ladies and gentlemen. We welcome all of you to our conference call this morning and wish you all the best for 2025. The underlying presentation for the call has been published this morning on our website. Today, we released the statement for the first 9 months of financial year '24-'25. We are going to present the highlights of this period and revisit our full year earnings guidance for business year '24/'25, which is unchanged. Following the call, we are going to answer your questions. A recording of this call will be available on our homepage shortly after the call. Now let me hand over to Südzucker CFO, Dr. Stephan Meeder. Stephan, please go ahead.

Thank you, Sandra and Nikolai, for the introduction. Ladies and gentlemen, good morning, and also a warm welcome from my side. Happy New Year to all of you, and thank you very much for showing your interest in Südzucker today. As mentioned, we would like to give you a brief overview about the business performance in the first 9 months of financial year '24-'25 and the details about our confirmed earnings guidance for financial year '24-'25. Thus, let me start, please, with the highlights of the first 9 months. You will find that in the presentation on Page #5. So let's move to Page #5 where you can see the financial highlights after 9 months. And as already indicated on 15th of October '24, Q3 performance was not able to match the very strong previous year's numbers. So after 9 months this year, we have reached the following numbers. You can see top of the slide, starting with revenues. So group revenues came in at EUR 7.5 billion, slightly below previous year's level. Coming to the operational key figures, EBITDA and operating profit. Group EBITDA was significantly down by 55% to EUR 502 million and group operating result down by even 73% to EUR 236 million. Cash flow decreased correspondingly to EUR 368 million and earnings EPS after 9 months came in at minus EUR 0.01 against EUR 2.49 last year. Looking at net financial debt, you can see that net financial debt as of end of November '24 came in EUR 93 million above previous year's level and decreased by EUR 82 million against the start of the financial year '23-'24, thus reaching EUR 1.7 billion. Now let's have a look into the segmental performance. This starts on Page #6. On this slide, you can find an overview third quarter isolated and the first 9 months on group level and on segmental level. And you can see that after 9 months, the group revenues, as just mentioned, came in slightly below prior year's level. Revenues declined in the Special Products, CropEnergies and Starch segments, but were at last year's levels in the Sugar segment and rose slightly in the Fruit segment. Looking generally on the group operating results, you can see that the decrease was driven by the Sugar, CropEnergies and Starch segments, whilst the Special Products and the Fruit segments showed an increase. Now let's move to the segment Sugar isolated. You can find this on Page #8. Here you can find the development over the last 5 years in the sugar balance world. So let's first have a look on the global view of the sugar market. And we base our forecast and assumptions on the data of S&P Global, one of the leading consultancies. And you can see that in the latest update of S&P Global, this latest update was from December '24. For the sugar marketing year '23-'24, which runs from October to September, S&P Global reports a surplus of 2.7 million tonnes, significantly down against the former expectation of a surplus of 5.2 million tonnes. So this per se is a positive news and thus, the stock-to-use ratio is slightly above 36%. Looking at the following year, that means looking into sugar market year '24-'25. Here, you can see that S&P Global expects no longer a surplus of about 4 million tonnes, which was the previous assumption, but now a balanced market. So this is also a positive news. This means the stock-to-use ratio is expected to decrease slightly to below 36%. Looking ahead into the next sugar marketing year '25-'26, which will start in October '25. Here, S&P Global now expects in its first estimate a deficit of 1.8 million tonnes and a decrease in the stock-to-use ratio below 35%. So if this is to be confirmed, this would be the first deficit on the world sugar market since '21-'22 sugar market year. So it's too early to say what this would mean for the global sugar prices. But as such, this assumption of a decrease in the stock-to-use ratio and the deficit for the world sugar market should work in favor of market prices. So coming from the world sugar market analysis to the EU sugar market. So you will find this on Page #9. You can see the graph of the price development, and let's start with a reflection on the ongoing campaign. So in the EU, the sowing and growing conditions for this campaign have been so far favorable. So since Q1, there have been increasing indication that this will lead to a significantly larger harvest and corresponding sugar production than originally expected. So this is on the one side, higher production, what happened on the consumption side. So in combination with the sluggish sugar sales so far this year, this has led to continued high sugar inventories within the EU. Also EU sugar exports have occurred in parallel. And third thing is that the already anticipated decline in EU sugar prices had therefore, intensified further over the summer months, leading to decreasing prices. Additionally, there are now further sugar imports from Ukraine to be expected from January '25 onwards to the extent of 109,000 tonnes for the first 5 months. So this is -- this rule is going to up to June this year. For the rest of the calendar year, that means after June, it is so far unclear what the EU is going to decide when it comes to imports from Ukraine, but we have to be prepared that another 109,000 tonnes from the Ukraine could come to the EU on a tax-free duty-free level. What has also happened in the meantime, so there is -- this, we have followed thus over the last years. So in early December '24, the European Commission in the Mercosur countries have jointly announced the conclusion of the negotiations on the EU-Mercosur agreement. So this agreement, if at the end ratified, would not come into force before 2026. And the implications for this Mercosur agreement are both on the sugar side and also on the ethanol side. Looking into the sugar first. So this agreement, if it would come into force, would mean that the customs duties for 180,000 tonnes of sugar of Brazil's current CXL import quota will be reduced from EUR 98 per tonne to zero and Paraguay will be granted a new duty-free import quota of 10,000 tonnes raw cane sugar per year for refining. That is on the sugar side, what is on the ethanol side. For the ethanol side, this agreement would mean that imports of ethanol in the amount of 650,000 cubic meters to come gradually into the EU over 6 years, and this is assumed to have an effect both on the EU sugar market and on the ethanol market. So let's continue on Page 10 with the development in the Sugar segment of Südzucker Group. And here, you can see -- so we are now on Page 10. You can see after 9 months, the revenues in the Sugar segment came in on previous year's level, reaching EUR 3.1 billion. On the one side, we have significantly higher sales volumes. On the other side, we have lower prices, balancing the revenues. That means the significant higher sales volumes were no longer fully able to offset falling prices. Prices in the EU have fell more and more sharply over the course of the fiscal year and dropped again significantly at the beginning of the new '24-'25 sugar marketing year starting in October. Also, the increased exports to the international markets put pressure on our average sales prices. This is reflected then in the operating result. You can see here that there is a strong decline, and this happened particularly during the third quarter of 2024-'25 fiscal year. So the Sugar segment for the first time in this year recorded an operating loss, and that showed negative figures for the entire reporting period of 9 months this fiscal year. The significant decline in result was thus mainly caused by the sharp downturn in prices. On the one side, and the other side, we had significantly higher manufacturing costs in the 2023 campaign, and this also had a negative impact from the beginning of this financial year. This means that the inventories produced at high cost during the '23 campaign were still being sold in the third quarter of fiscal year '24-'25 and thus at prices that have fallen significantly again at the beginning of the new sugar market year, which placed an above-average burden on the third quarter of '24-'25 fiscal year. So let's continue going over from the Sugar segment for the next segment, which is the Special Products segment. You will find this on Page #11. Here, you can see on Page 11 for the Special Products segment, this comprises Freiberger, BENEO and PortionPack Group. So here, you can see that after 9 months, revenues came in at EUR 1.7 billion. And so they decreased moderately, and this is due to lower volumes and prices. So in previous year's period, 9 months, we recorded revenues of EUR 1.8 billion. Looking to operating profit, this is a positive news. So here, the operating result in the Special Products segment increased slightly, reaching EUR 152 million compared to EUR 150 million in previous year's period. So what were the main factors for that? Here in the Special Products segment, we see higher margins. They were the main factor behind this slight overall rise in the Special Products segment. The divisions themselves experienced fluctuations in raw material costs with some rising or remaining at last year's level. Let's move over to the third segment, which is CropEnergies. You will find that on Page 12. We're also looking at 9 months figures on the right-hand side of the table, you can see that after 9 months, revenues in the segment CropEnergies were down significantly, reaching EUR 711 million compared to EUR 848 million in previous year's 9 months period. What were the reasons behind this decrease? So the decrease is mainly due to lower prices for ethanol as well as for food and animal feed products. On the other side, volumes have increased. So this is positive. This compares to a previous year's low level of production, which themselves were due to scheduled maintenance in this prior year's 9-month period. Coming to operating result after 9 months, there only stands EUR 8 million in operating profit. So the operating profit was affected by lower prices. And we can see here that thus in line with the revenues trend, the operating result for the reporting period, 9 months of this fiscal year was also significantly lower than last year. The key factor for this decrease were the prices for ethanol, which have been or which are significantly lower than in previous year's period. This is on the one side. On the other side, we see lower also net raw material prices and lower energy costs and increased sales on the positive side, but those 3 factors have not been near enough to offset the negative impact of falling prices. So to be precise on the prices, we can see that the average ethanol prices in the first 9 months came in at EUR 682 per cubic meter, and this compares to EUR 782 per cubic meter in 9 months period of the previous year. Looking isolated in December, here, we can see that prices have stabilized. So the average ethanol price in December was at EUR 663 against EUR 602 per cubic meter in December 2023. So from CropEnergies, let's move over to the fourth segment, which is the Starch segment. You will find this on Page 13. Also looking at 9 months figures, you can see on the right-hand side of the table that revenues in the Starch segment declined significantly, reaching EUR 724 million after EUR 828 million in previous year's 9 months period. So this downturn was the result of significantly lower prices for starch products as well as for byproducts and ethanol. In contrast, sales volumes developed positively and increased in the reporting period. Coming to operating result in the Starch segment, you can see that after 9 months, we have reached EUR 24 million after EUR 58 million in previous year's period. So operating profit was also significantly down. What were the reasons for that? On the one side, we see substantial decrease in raw material and energy costs, along also with higher sales volumes, but the same for CropEnergies, these effects were not enough to completely offset the significantly lower prices. Additionally, the third quarter was also affected by the several week flood-induced shutdown at the Austrian Pischelsdorf location in Austria. So this affected the operating profit with a EUR 7 million charge. So let's move on to the fifth segment, which is the Fruit segment. You will find that on Page 14. After looking at the 9 months figures on the right-hand side of the table, you can see that the revenues in the Fruit segment showed a slight increase, thus reaching EUR 1.2 billion in 9 months period and this is particularly due to higher sales volumes in fruit preparations and higher prices in the fruit juice concentrated divisions. Looking to operating profit. So there is a positive trend. The increased operating profit to EUR 75 million after EUR 66 million in previous year's period. So what were the reasons for this increase in operating result? So operating result came in significantly above prior year's level. This is due to a slight increase in sales volumes with moderately higher margins. The contribution of the fruit preps to the result was thus enhanced. In contrast, the contribution to the results from the fruit juice concentrates decreased despite slightly higher sales volumes due to slightly lower margins. So after having had this look on the 5 segments, let me now turn to the main points of the profit and loss statement on Pages 16 and 17. So what is to come below operating profit. It is the result from restructuring and special items and the financial and tax results, which will be covered now in this part of the presentation. And let me start with the results from restructuring and special items. Here, you can see that after 9 months, we had to record a special restructuring and special items result of minus EUR 72 million. And this negative result resulted primarily from the segment CropEnergies. What happened here, what had to be accounted for in the third quarter. So at the time, segment CropEnergies is currently investing in several large-scale projects with substantial capital requirements. This you're all fully aware that's the project that has been started in the CropEnergies segment over the last months. Amongst them is also the new production plant of renewable ethyl acetate at the site's location. So this is one of the big projects, and we see a challenging market environment and increased investment costs and all of this required that we had to reassess the profitability of the entire project pipeline. And this reassessment of the entire project pipeline caused the suspension of the ongoing investing activities in the construction of equipment for the production of the protein animal feed product, EnPro at the production location of the British subsidiary, Ensus. And so this project stop for EnPro has induced an extraordinary expense due to the impairment of the CapEx already incurred for this project and the provision for contractual obligations also linked to that project. And due to the subsequently lower return expectations for the Ensus plant, an extraordinary partial write-off for the equipment on the existing fixed assets that was necessary in Q3. In total, these elements led to a special item of minus EUR 76 million, which we had to account for in the third quarter of this financial year. After the result from restructuring and special items, let's have a look on the financial result. You can see that after 9 months for the financial result, we see a net interest result of minus EUR 73 million and another financial result of minus EUR 3 million. So the higher interest expense was mainly due from higher average interest rates. So they have increased on a net financial debt level, which remained almost stable on average for the 9 months of this reporting period. So let's move on to Page 17. On Page 17, you will find taxes on income and earnings per share. After 9 months, taxes on income came in at EUR 59 million after EUR 152 million in the same period last year with an increase of the underlying tax rate to 64%. So this tax rate is extraordinary high. So the question is what has moved up the tax rate, which normally is in the range of plus/minus 25%. So therefore, now we had to account for a tax rate of 64%. So what are the reasons for this increase in tax rate? So we first have to look to explain this, we have to look into prior year's tax rate and prior year's tax rate was supported by higher profits in the Sugar segment that were partially tax-free due to non-capitalized losses carried forward from the past. So this was a one-off effect positively in '23-'24 reporting period, and this one-off is not repeating in '24-'25. On the contrary, the low results in the Sugar segment in '24-'25 with a negative outlook, they are now a burden for this year's tax rate. Due to this negative outlook, deferred tax assets have been impaired, which led to an increase in the tax rate. That was one effect explaining the higher tax rate and the second effect explaining the higher tax rate is the negative impact of the restructuring result as just explained, the EUR 76 million in CropEnergies segment for the EnPro project at Ensus. And because those charges, they have not led to a compensating tax benefit, hence, increasing the tax rate significantly. So those 2 items explain the increase of the tax rate to 64%, which going forward in a normal year should be in the range of 25%. Finally, earnings per share came in at minus EUR 0.01 compared to EUR 2.49 in the previous year's period. Let's move now on to Page 19. Here you can find cash flow, working capital and investment development. So now we are on Page 19. And you can see that following lower EBITDA and operating profit, as just explained, also cash flow decreased. And you can see cash flow after 9 months reached EUR 368 million. Working capital decreased by EUR 345 million and investment in fixed assets reached EUR 417 million against EUR 328 million in last year's 9 months period. Let's move on to the balance sheet. You will find that on Page 21. And here, we have a focus on net financial debt and the equity ratio. You can see net financial debt at the end of November turned out at EUR 1.7 billion. So what are the effects changing net financial debt? On the one side, we have cash inflow from operating activities. This amounted to EUR 689 million, as you can see. And this includes, in particular, the cash flow of EUR 368 million and the decrease in working capital as just explained with a cash inflow of EUR 345 million. Investments in fixed and financial assets totaling to EUR 422 million and profit distributions of EUR 255 million, which we paid out in July this year after general assemblies could be thus fully covered as a result. Thus, the net financial debt was reduced from EUR 1.8 billion as of 29th of February '24, that means beginning of the -- this financial year by EUR 82 million to EUR 1.7 billion by end of November, and that means after 9 months '24. The equity ratio now stands at 44%, which is lower compared to the previous year level and still on a very solid level. So finally, let me now turn to the outlook. You will find this on the pages 23 to 25. And as stated at the beginning, we confirm our outlook for this financial year. So you can see we confirm our group guidance for financial year '24-'25. We expect -- starting with revenues, we expect group revenues to come in between EUR 9.5 billion and EUR 9.9 billion by the end of February '25 for the 12-month period of this fiscal year. When it comes to group operating result, we confirm that we expect a range between EUR 175 million and EUR 275 million, meaning a midpoint of EUR 225 million. Looking more detail into the segments, starting with the Sugar segment. In the segment Sugar, we expect earnings range between minus EUR 150 million and minus EUR 50 million. Therefore, a loss has to be expected in Q4 too. And though we are not yet in a position to give a first guidance for the coming financial year '25-'26, we wanted to point out already now that a loss for the Sugar segment has to be expected in fiscal '25-'26, too. After Sugar, let's have a look on the Special Products segment. Here, you can see that the operating result is now expected to come at previous year's level. In CropEnergies, we now expect an operating result in a range of EUR 5 million to EUR 20 million. The Starch segment should see a significantly lower operating result compared to last year. And finally, Fruit segment, here, we now see that the operating result should moderately be above previous year's level, totaling all in all to a range of EUR 175 million to EUR 275 million for group operating results. So after having explained 9 months figures and an overview of the outlook, ladies and gentlemen, thank you very much for your attention so far. Together with Nikolai Baltruschat we are now looking forward to your questions.

[Operator Instructions] Our first question comes from [ Ben Hessler ] from Barclays.

I just have the one. Could you please share how Südzucker plans to address the upcoming EUR 500 million November 2025 maturity?

Ben, thank you for your question. So our EUR 500 million bond senior debt is maturing by November. So you're fully right. We are in the process of preparing the refinancing of this bond. We are in talks with the banks. We are preparing and we are optimistic to come closely to the market for refinancing that bond.

That's clear.

The next question comes from Alex Sloane from Barclays.

A few questions from my side. Firstly, just on the Mercosur politics. Any possibility in your view that the impacts that you outlined could get watered down before this is ratified? And could you just repeat on sugar? I think you said that the tariffs on 180,000 tonnes of Brazilian sugar would be reduced from EUR 98 per tonne to zero. Is that correct? And secondly, just a bit more color on the Sugar division. In the short term, you talked about an above-average burden from higher production costs in Q3. Is it fair to assume that fades that impact in Q4? That's the first one. And then secondly, yes, thank you for giving the early indication with regards to fiscal '25-'26, where you're still expecting a loss in sugar. I wonder if you could talk through some of the moving parts to that early expectation and whether that level of loss as you see it as a base case today would be similar to fiscal '24-'25 or a lower level of loss?

Yes. Starting with Mercosur. I mean, the discussions on the Mercosur agreement, I think in total, this has over -- is it over 10 years? So it took at least took a very, very long time with ups and downs for this agreement. So now it seems that the EU Commissions and the Mercosur countries have reached upon an agreement, but still this needs to be endorsed and ratified by all the EU countries. So still some disturbance could be there, but we assume that this deal is going to be closed. If it comes then finally into force, actually, it would mean that from -- on the sugar side, there will be additionally 180,000 tonnes of Brazilian sugar coming in with no duty. So this has a negative price effect, but 180,000 tonnes on a market, which is between EUR 15 million and EUR 16 million is not too much. So on the sugar side, let's wait and see. On the ethanol side, 650,000 cubic meters is more percentage-wise for an EU market of ethanol being approximately at 11 million cubic meters. So all imports coming in typically have a negative sentiment on the prices. So this -- but we have to see because also in the ethanol market also today, 3 million cubic meters of imports are coming in. So to be seen what finally comes out, it's early as 2026, and we will see the effects. So could be some pressure on prices, but we do not expect this to be really material. That's for Mercosur. You're right, higher production costs for this year. If you look into our guidance for [indiscernible] you can see that the operating profit for the Sugar segment as just explained, is between minus EUR 150 million and minus EUR 50 million. And so the -- if we take midpoint minus EUR 100 million, it's roughly EUR 650 million deterioration in operating profit compared to previous year. And those 2 effects of the EUR 650 million anticipated the decrease in operating profit for the Sugar segment has 2 main effects. One is higher cost and the other is lower prices. And those 2 effects, they are almost 50-50 with the prices being more important. So both of them over EUR 300 million and lower prices a little bit more. So it comes -- the EUR 650 million comes from deterioration in operating profit comes from higher costs and lower prices approximately half-half. And your third question was, if I got this right, for the fiscal '25-'26 for the sugar losses. Yes, as we have indicated, we need to be prepared for a loss situation. That's what we wanted to flag off today. But there's still a lot of uncertainty. So we are not in the position to be here more precise than that because we finally will first have to see how the thing comes out. There are still some weeks to go. So the ongoing [indiscernible] going until end of Jan and Feb and it's -- we see a stabilization of spot prices on the European market, and we're also confident that prices for the new sugar market year would increase as of 1st of October, but there's not yet enough grip to be more precise on the figures. But yes, we do expect also a loss for the Sugar segment in fiscal '25-'26.

That's helpful. So your base case is an improving price outlook. How about on costs? So I didn't quite understand the higher production costs, appreciate sort of half of the full year impact, but have we seen the peak of that impact in Q3 was the question.

Yes, yes, that's right. So the main is in Q3 because in Q3, we had the above burden or the above-average burden that -- that the sugar from the last campaign was still sold in Q3. And in the new sugar market, yes, that means on the reduced prices.

The next question comes from Oliver Schwarz from Warburg Research.

First set of questions will be mostly attuned to the situation at CropEnergies. If I understood you right, you say the investment in EnPro at Ensus in the U.K. was suspended. If I'm not mistaken, that could mean 2 things. It's either permanently terminated or it is just put on hold until let's say, further notice or until a later point of time. Could you please clarify which of the 2 options is the one you alluded to? That would be my first question. Secondly, do you want to do that one by one or...

Yes, we can do one by one. Yes, as I explained for CropEnergies, CropEnergies has evaluated the entire project portfolio. There are several projects ongoing. And this reassessment of all projects that led to the decision to stop finally the EnPro project. So this is not put on hold. It is stopped.

Okay. Understood. Second one in connection to that, I mean, the EnPro expansion or the investment in EnPro, which as we can see by now, it was rather, let's say, extensive. That was mainly targeted to bring the breakeven of Ensus down to make it a more, let's say, integrated plant, not similar, but close to what you have in Continental Europe. So if you now scrap that part of the site, that obviously fixates your breakeven point at a higher level. And at the same time, you alluded to the Mercosur agreement, which will have from my point of view, let's say, a limited impact on the sugar market, but a vast impact on the bioethanol market. I know that the U.K. is no longer part of the EU. So the Mercosur agreement is unlikely to directly affect the Ensus plant. But if I may pick your brain a bit about that, what will be the impact or the likely impact of the Mercosur agreement on the U.K. bioethanol market? And is Ensus in a position to, let's say, sustainably create or generate, let's say, profits in such a generation? Or is the plant as such, let's say, perhaps slated for either let's say, a temporary or a permanent closure from your point of view as it is your highest cost assets in CropEnergies, I presume. That would be my second question.

Yes. I mean for Ensus, we are in a challenging market and operational profitability and environment. So we have to prepare that for Ensus this year, there's an operating loss. And so we evaluate all the cost positions with the management team. So -- but there's no yet a decision taking for whatsoever. But it is clear Ensus is in a challenging situation. When it comes for the Mercosur agreement, nevertheless, this will fade in over 6 years. So it's not by tomorrow that those volumes would come in, but we have to monitor very closely together with CropEnergies and Ensus management team, what are the implications for the Ensus plant as a total. And -- but nothing has been decided going forward so far.

Okay. But will that -- or from your point of view, will those volumes that will go into the EU market probably also find their way into the U.K. As I said, the Mercosur agreement obviously is not concluded -- or is there already yet a distinction between the European bioethanol price and the U.K. price? Or is that one wash, you may say?

The imports already come to U.K., too. And there's -- with the Plus pricing scheme, even U.K. having left the European Union, the EU pricing scheme for ethanol in U.K. is the same than in Continental Europe. But it's true also as of today, a lot of U.S. imports come to the U.S. market -- to the U.K. market.

Okay. Very clear. And secondly, if I may, could you elaborate a bit about the restructuring charges, not at CropEnergies, but at the Specialty Products, which part of the business was affected? And why? Could you go into more detail on that please?

When it comes to the restructuring, we see that after 9 months, this totals to EUR 72 million minus as explained. And there the main effect comes EUR 76 million from CropEnergies. But for sure, there are also some minor restructuring items, plus and minus in the other segments. If you ask for specialties, here, we have a gain of the disposal of the Richelieu dressing and sauces business, which we have sold, and this has accounted for a positive special item of EUR 70 million. So this one was positive, but there are also other elements to a small extent in the other divisions totaling then all together to minus EUR [indiscernible] when it comes -- it may be also of interest when it comes to sugar, we have a temporary closure of the [indiscernible] site of AGRANA Sugar in Buzau, Romania, and this has accounted for roughly EUR 4 million charge in special items.

Understood. No -- to press you on that point, I was, let's say, especially alluding to the EUR 10 million or roughly EUR 10 million in Q3 that according to the quarterly report was due to a charge, especially in the Specialty Products portfolio that they were to the amount of EUR 10 million, if I understood that correctly, restructuring charges, especially in that vicinity of your business. And that's basically what I wanted to find out which part of the Specialty Products business was affected by EUR 10 million?

I got your point. Yes, I got your point. After 9 months in restructuring of special items, we have EUR 11 million plus in the specialty segments and thus EUR 17 million positively coming from Freiberger, the sell, as I just explained, the dressing and sauces business of Richelieu. And there's a charge of roughly, I think, EUR 4 million for BENEO when it comes to -- we had to devaluate down the Faba beans to market value.

Okay. I step back into the line, but I have some additional questions, but I don't want to take all of the time here. So talk to you soon.

The next question comes from Hartmut Moers from MATELAN Research.

I would like to start with the outlook. And I mean, I've seen you've made some minor changes within the indications you've given for the individual segments. And I can understand most of them. There's one point I was noticing in your special products segment, you were down 6.3% in revenues by the 9-month period, whereas for the full year, you're still expecting minus 1% to minus 4% according to your definition of the arrows. That would imply that you have a major swing in the fourth quarter. You must have a positive change in the fourth quarter by 15% or something like that percent if you want to fall within that range. So is there anything that triggers that swing in revenue development? And could you also please elaborate a little bit on the 3 segments, how business is doing, what's doing better and in terms of revenue development, but also in terms of margins? That's the first question.

Yes. generally speaking, as we said, for the specialty segments, we assume a slight decrease in revenues and a stable development for operating profit. When I look into 9 months figures and there is nothing special in Q4. So we typically foresee what has happened on the first 9 months to continue also in Q4. So for the Freiberger division, but as you know, we do not disclose individual divisional figures. But as a trend, you can see that for the Freiberger business, we see a slight deterioration in margins and lower [indiscernible] but still on a high level. When it comes to BENEO, we have seen in the first 9 months, a very positive development, both on operating margin level, operating profit level and -- but turnover decreased also slightly.

And PortionPack?

And PortionPack is stable. There's nothing meaningful to mention. So this is -- it's a smaller business compared to BENEO and Freiberger division, but this is going on stable.

Okay. The second one relates to CropEnergies. So the first thing, I don't know when you reviewed your -- the guidance you were giving and I've seen that you've taken down the range. But what we've recently seen is that prices have increased. We are back to EUR 680 around and -- for the ethanol and at EUR 234 for the wheat, you should have a positive margin of around EUR 50 per tonne, which is well, not that bad, at least it should allow you to produce positive results again. So can we -- can you confirm roughly that things should improve in the fourth quarter and that we might look rather at the upper end of the range than the lower? Is that a view that's correct or...

Yes. It's a little bit too early to say because, as you know, the ethanol prices are very volatile. Looking into the last quarter compared to others, CropEnergies has a lower hedging rate for ethanol. That means we are more confronted also to -- due to the lower hedging rate of the developments of the ethanol price. Typically, I would say there are good arguments for an increased ethanol price. As you might have seen that as of January 1, the greenhouse gas emission reduction targets in Germany, they have been increased, the CO2 quota in the [indiscernible] have increased. The fraudulent or obviously or under suspicion of the upstream emission rights from China. So these certificates, they have been put out of the market. So there are good arguments for increasing ethanol prices as of January. So far, as you're right. So the average prices in January on ethanol, they stand roughly at EUR 607 per cubic meter, which is higher than January '24. And so there are good reasons to believe that the price is supportive. But we have also seen downward trends on the ethanol price but I would rather assume higher prices, and that means we also assume for CropEnergies to be a midpoint.

Okay. And the other one relating to CropEnergies would be, I haven't really clearly understood what the EUR 70 million charges were for. I mean you were relating not only to the Ensus project, but also to the [indiscernible] project?

No, no, no, no. There, you got me right. It is -- the EUR 76 million charge in restructuring item is fully to the stop of the EnPro project. And to give you some more details on that, so I mean, what has already been constructed amounts to EUR 23 million. There have been obligations taken for the contract of EUR 5 million and some breakup costs of EUR 2 million that brings these charges completely -- which are directly linked to the EnPro equipment to EUR 30 million. And due to the lower earnings expectations, the partial write-off for the ethanol plant was EUR 45 million. So this together brings the charge to EUR 75 million, but this extraordinary charge is one and only to EnPro. There are no other projects affected from CropEnergies side.

I mean EUR 75 million would have been the entire investment. I mean, if you would have been able to stick to the original plan.

Yes, but it's not everything has....

One could argue why haven't you done it?

Sorry, I don't get that question.

No. I mean the original project, I mean, you said at the time you want to spend EUR 100 million, EUR 25 million for the...

Energy savings.

Exactly for the refurbishing of the plant and EUR 75 million for developing EnPro. So if you now take EUR 75 million or EUR 76 million charge for EnPro, the question arises why haven't you invested? Why haven't you spent the money? If you now take a charge in exactly the amount, which would have costed for you to build the thing. One would think you should have done it.

Yes. But that's what I just tried to explain. So the EUR 76 million charge is not only related to the EnPro project. So EUR 30 million is directly linked to the equipment already installed or contract obligations already taken and EUR 45 million is for the entire ethanol plant as far as write-down of our profit expectation.

It's not the forgone.

No, no.

Revenues from EnPro. It's for the low -- it's a write-down of the plant.

Exactly. In the amount of EUR 45 million.

I see. That was very helpful.

We have a follow-up question from [ Ben Hessler ] from Barclays.

I just wanted to clarify, if I recall correctly on the last call, you mentioned that you were wanting to address the November 2025 bonds following the 3Q results. Is it still the intention to come to the market following this closing event? And how are you viewing the issuance environment at this point?

Yes, I'd be following Q3, that means in due course, that's one of the opportunities that we are investigating, but there are also options, but it's clearly on the table. One opportunity would be right now after Q3 figures.

The next question is also a follow-up from Oliver Schwarz from Warburg Research.

Just as a follow-up to the recent set of questions we heard alluding to the Ensus plant. Can you remind us the remaining book value of Ensus at the moment after the write-downs of Q3? How much is left of that?

I'm not -- I mean the partial write-down is EUR 45 million. I don't know what is then the remaining part. It's...

We have to come back on this one Oliver to give you the exact number.

Yes, no problem. My second question, a completely different topic, I'm afraid. Fruit. Obviously, performance was ahead of your expectations, and you also notched up the guidance for the full year, which is, let's say, a positive surprise, at least from my point of view. Fruit as such, if I'm not mistaken, please correct me if I'm wrong. But I think this is a subsidiary of AGRANA, which is not to 100% in the hands of AGRANA, but partly owned still by BayWa in Germany. Is that correct?

Not fully. I mean the Fruit segment or the Fruit division, what is -- yes, it is fully under -- it is at AGRANA, yes, the Fruit segment and the Fruit segment is comprised of 2 divisions. One division is the fruit preparations, which is the larger part, and this is 100% AGRANA. And the minor part of the Fruit segment or the divisions is the division of fruit juice concentrates. And you're right, this is a 50-50 joint venture with RWA, Raiffeisen Ware Austria.

RWA is...

But fully consolidated by AGRANA.

Correct. But RWA, if I'm not mistaken, has been taken over from AGRANA by -- so that basically has been a transaction. I don't want to go into the details here, which basically leads me to the question, would be AGRANA interested in acquiring the remaining 50% of the Juice joint venture to basically also, let's say, help RWA to finance the transaction price with BayWa.

Yes. This is part of the press release that BayWa has given in the course of their restructuring. They said they have sold the RWA to an Austrian consortium. And within this announcement, it also has been indicated that there could be interest of RWA of selling the 50% stake in the Juice. This is so far press information. If this confirms to be materialized in a project, for sure, AGRANA would have a look into, yes. But also other options are possible. This is in the course of the buyback restructuring. There's not too much that we can comment upon. But if this would come to the market, for sure, AGRANA would have a look into.

Right. And probably also one on sugar. I mean, the Q3 results was clearly negative because of sugar in inventory that was produced at very high costs and now needed to be sold at very low prices, hence, most probably below production costs. Is there sizable inventory from high-cost production sugar left at Südzucker? Or was that all sold already at the Q3 stage?

Almost everything is sold in Q3. I mean Q3 goes until November, there is not much left. It should be -- let's assume it has been digested in Q3.

Understood. So would I be correct to, let's say, imply that this might help not only Q4, but also the upcoming financial year in regard to the extent of the loss you were implying, meaning that this situation as we had it this year with the high cost inventory to be sold and hence creating a negative impact on your P&L is not likely to reoccur in the next financial year?

Too early to say. I mean there are several aspects. So as we have flagged, we also foresee or have to be prepared to a loss situation for the Sugar segment for fiscal '25-'26. For sure, we assume that production cost in the '24 campaign would go down compared to '23 campaign. Yes. But on the other side, it will be linked to the sugar market here, the prices for the sale of the sugar contracts, they are in place until October. So as sugar market year and fiscal year of Südzucker are not the same, sugar market year goes from October to September and our fiscal year from March to Feb, we will also have in '25-'26 financial year, 7 months of old contract prices. So the key question which we cannot answer as of today is the key question will be what will be the new sugar market price contracts as of 1st of October '25. So there are good arguments to see based on the -- what I have explained to the world market development and European market development. So there are good arguments to foresee a price stabilization and a price increase as of 1st of October, but we do not have as of today enough grip to really evaluate that precisely.

I think I got that perfectly well. But I mean, that would imply that there is no, let's say, similar situation that you have to sell, let's say, high-cost inventory at low selling prices, especially if you are looking for or basically hoping for higher pricing points following the new annual contracts that go into place from the 1st of October this year. Would that be a correct interpretation?

That's our base case assumption. This is also underlined that we assume also a decrease in contracting hectares for FY '25 sugar campaign.

Understood. If I'm not mistaken, there are basically 2 rollover dates. One is the 1st of October that you mentioned, that's basically with customers from the food industry, but there's also a rollover on the 1st of January, which is with the large supermarket chains that you cater to. Is that still correct? Or are all contracts, let's say, rolled or renegotiated on the first -- or towards the 1st of October of each year?

Yes. Main part is 1st of October, but you are right, there are also full year -- the calendar year contracts. That means that there is also for the new calendar year contracts, which have come into place 1st of Jan '25, there's a lower price compared to previous year's 12-month calendar year period. So -- but the major part is on sugar market year, but they are also calendar year contracts.

Okay. Okay. Understood. And the last one, I promise, Starch also had less than optimal quarter in Q3. When looking into supply and demand, obviously, a part of that is due to the construction sector. However, on the other side, let's say, in regards to demand, the packaging sector, so let's say, Amazon packets and the like that use starch as a glue. That seems to be holding up fairly well or even expanding. Could you please elaborate why the decline in starch was that pronounced in Q3?

So one effect was a one-off in the flooding in Austria, as I said, that was -- that accounts for EUR 7 million of extra charge. And your analysis on the global supply and demand for the starch business is correct. So we see an increase in volumes. So roughly 9% volume-wise is so businesses are recovering. So from the volume perspective, this is positive, but we clearly have -- we see a downward trend on prices. So the average price will be for native starches, modified starch, ethanol and also for gluten, they are on a downward trend. The raw material prices, too, but the downward trend on prices is more significant than the reduction from raw materials. But both raw material prices and prices for the end products go down whilst volumes go up, and this explains the deterioration in operating profit.

Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Nikolai Baltruschat for any closing remarks.

Thank you, Sandra, and thank you for the lively conversation today and your questions. Please don't hesitate if you have further questions, just to reach out to us and wish you a good day. Thank you. Goodbye.

Thank you very much.