Suedzucker Ag Unsp/Adr

Ladies and gentlemen, good morning from Mannheim. We welcome all of you to our conference call. The underlying presentation for this call has already been published this morning on our website. Today we released the statement for the first half of the financial year 25-26. We are going to present you the highlights of the period. We visit our full year group earnings guidance for the business year. which we adjusted on August 21st. Following the presentation, we are going to answer your questions. As already mentioned, a recording of this call will be available on our homepage shortly after the call. Now, let me hand over to our CFO, Dr. Stefan Mehler.

Thank you, Mathilde and Andreas, for the introductions. Ladies and gentlemen, also a warm welcome from my side, and thank you very much to all of you interest showing in , as mentioned. I would like to give you a brief overview about the business performance in the first six months of fiscal 25-26, and I would like to give you some more details about the confirmed earnings guidance for fiscal 25-26. So let me start with the highlights of the past six months of the fiscal. You will find this on page five. But before going into the details upfront, let me say a more general remark on where we stand as of today. So you can see in the figures that there is a weak performance in Q2. Yes, it came in as expected, but it's clear it's a weak performance. But on the other side, we confirm our full year financial guidance for the operating profit as of today. which stands at 100 to 200 million euros. So, when looking into the remainder of the year, we believe that from Q3 onwards, this should be the turning point to the positive, but the figures that I will continue to explain to you in the following for Q2 and H1 show a weak performance. So, going into the details. You can see that Q2 was performance was not able to match prior year's numbers for Q2, and the same is true for H1 compared to H1. And after six months, we have reached the following numbers. You can see group revenues came in at roughly 4.2 billion euros, which is significantly below prior year's level. Same is true for group EBITDA, which was significantly down by 55% to 189 million euros. And group operating profit also only reached 42 million euro versus 269 million euros in previous year's period. Same is true for cash flow, which decreased to 67 million euros. And when it comes to net financial debt, so net financial debt as of 31st of August this year came in 285 million euro below previous level and did remain stable compared to the end of fiscal 24-25, which is end of Feb 25. So, let me continue with the next stages. We have a look here on H1, so bringing H1 Historic context, you can see that especially for operating group results, this is a strong decline compared to previous year's periods. You can see that the decline is in revenues if they are in operating results. Particular affected in H1 are the segments of sugar, special products, crop energies, but we do see an increase in the food segment, and that is something important to note. We do this in each and every quarter. We know we are active in volatile markets, but what is good about Südsucker Group, that it is a strong and resilient portfolio, and we always have divisions who do also benefiting for the group with a strong performance. And overall this year, this is the food segment, but we also see a good development in the divisions of Benio and Freiberger. So on August 21st, we changed our group guidance for the fiscal 25-26. We now expect revenues to range between 8.3 and 8.7 billion for the full year, EBITDA between 470 and 570, and operating profit between 100 and 200 million euros. So further details for the outlook I will give on later. What we can see if we move on to what we will see on page 10 is there are persistently low sugar prices in the global market in general GPU market environment with continuous impact into autumn 2025. And we also do see continuous volatility going forward, which you cannot exclude due to geopolitical and global economic conditions. You are all fully aware of that. So let's move on to page nine. You can find it's a little bit difficult to read, but it's also a backup information for you. You can find the detailed results of the segments. And as already mentioned, after six months, the group revenues came in different levels. We do see revenues decline in the segments of sugar, special products, core energies, and starch, but revenues rose slightly in the food segment. And when it comes to the EBDR, as already stated, there's a decrease as well as in operating results. This is largely driven by the sugar segment. but was also significantly below prior year's level in special products, crop energy, starch segments, and positively to note the food segment, so an increase. So most important, or which is for H1, really important to discuss in more detail is development in the sugar segment, and to see the development in the sugar segment, we have also always have to have a close look what happens on the global sugar market, so I start with the global sugar market on page 10 because this has an impact on the European sugar market and the development of the European sugar market has an effect for the sugar segment development in . So let's have a look on the sugar market as told on the worldwide scale. You will find that as I said on page 10. Let's have first a look what is positively on the world market. You can see that consumption is still growing. So worldwide, on a worldwide scale, sugar market is still growing. You see this is the normal blue bars. You can see that consumption is going up. Dark blue is the production, and you can see that we have 24, 25, a market with a deficit, and deficit markets and commodity markets are beneficiary to the prices. That is the situation we started, but in 25, 26, sugar marketing year, and just a reminder, sugar marketing year always starts 1st of October and goes until end of September. So for sugar marketing years 25, 26, and 26, 27, it is expected that the market is in a surplus. That means production going over consumption, and in a commodity market, this is leading to a bearish sentiment on the prices. This is also, if you have a look on the sugar market prices, we do not have this in this presentation, but you can find this in our investor slide deck on our homepage. They have all the detailed price developments, and you can see that recently there is still a downward trend in market prices. And another factor also contributing to that compared then into Euro is the weakness of the U.S. dollar, which is also a bearish factor. So going from the global sugar market, coming to the European sugar market, so as a mid-summary, we can state that from the world market, we do not have a support. The contrary is true, so there's a bearish sentiment for sugar on the world market. and this translates also to the situation in Europe. So, here also the graph, you can see the dark blue is the productions, and the normal blue is the consumption. When it comes to consumption in Europe, you can see that there is a, it depends whether you start looking into the figure 22, 23. If you take this, you can see that it's rather stable consumption in Europe. If we take also into consideration 21, 22 as a starting point, we can also come to the conclusion that European market is rather in a slightly downward trend. So going into the details, for the recently started sugar marketing year 25-26, so which started 1st of October 25th, The EU Commission and also the analysts from market survey expect a significant decline in cultivation area for Europe, so less acres with sugar beets. So based on this production, including isoglucose is forecast to decrease to 15.9 million tons. That's the graph or the bars on the right-hand side in the graph. And as a result, the EU is expected to have a balance in export-import volumes. The sugar price, let's have a look on the sugar prices, but it's not on the graph, but let me explain to you the development for the sugar prices. So the sugar prices, which have been published by the EU Commission, fell significantly down from 619 euros per ton at the start of the 24-25 sugar marketing year in October 24, sharply, and since it has continued to fall, reaching 550 euros per ton at the start of the 25-26 fiscal in March 25, and in July 25, so this is the latest available publication, EU sugar prices stood at 534 euros per ton. So one aspect that we always have to put into consideration when we discuss sugar prices in Europe is what is happening with Ukraine. As we stated in the last conference calls, one factor which heavily weighed on European sugar prices was the Ukraine imports over the last years and months. So, at current state, the EU-Ukraine Association Agreement foresees that the import, allowed import, or the duty-free allowed import into the EU amount to 20,000 tons for this year, pro rata temporis. But the ongoing discussion is to increase those volumes to 100,000 tons as of 1st of January next year. So, for sure, we stand with Ukraine, but we heavily oppose to those additional duty-free imports, given the fact that the European market is well supplied. After having had this macro look on the world sugar market development, the European market development, how does this translate to the sugar group sugar segment? You can see in the graph on the right-hand side that the revenues significantly decreased. So in H1, 24, 25, we stood at 2.1 billion euros in turnover. So this has decreased to 1.4 billion euros. And when it comes to operating profit, it even turned to a loss situation. So, in H1-2425, we stood at as a operating profit for the group for the Shizuoka segment at 72 million euros. And this has turned to a loss situation of 89 million euros operating loss. Let's continue with the special product segment on page 13. Here you can see that after six months, revenue in the special product segment decreased moderately, which is mainly due to the disposal of the dressing and sauces business in the U.S. from Division Freiberger, which was executed in Q2 2425. So, all in all, revenues declined moderately from 1.14 billion to 1.1 billion euro in H1 2526. Coming to operating profit, we also do see a decrease. You can see from 108 to 71. So the operating profit decreased significantly to 71 billion euro in the first half of this fiscal. And this development is mainly due to the rising production cost that we see in these divisions, which could not fully be passed on to customers.

Going forward on page 14, here you can see the development of crop energy segments, so the ethanol business.

You can see also, let me start with the key figures on the right-hand side. You can see that revenues were down from 484 billion Euros in H1 2425 to 402 in this H1 of the current fiscal. And operating profit also turned to the negative from 17 million euro in H1-2425 to a minus 13 operating loss in the crop energy segment in 25-26. And the main reason for development in revenues is a decrease in production, so it's not linked to the market development, ethanol market or the need or the development for biofuels. is still pretty stable in the U.S. Sorry, in the EU. The development of crop energies here and on the revenue side was linked to internal reasons, so the decrease is primarily due to significantly lower sales volumes, mainly resulted from both scheduled and also unscheduled maintenance were carried out due to technical issues. When it comes to the operating profit, so as I said, it turned to a negative. and this was due to significantly lower prices in the first half. We will see when we discuss the outlook further on. We always state that ethanol prices are volatile. There are good reasons given supply and demand in Europe. There are good reasons that prices should increase. That's what we also state in the quarterly calls we had in prior periods. And we did see this increase finally in the last 10 days, yeah, or I would say last week. So in the last days, ethanol prices have increased significantly in Europe. So this is a positive sign. This also is reflected in our forecast, which I will discuss at the end of this presentation. So let's move on to the starch segment. This is on page 15. You can see also on the right-hand side that after six months, revenues in the start segment declined moderately from 505 million to 474 million euro in six months of this fiscal. And this was due to the overall decline in prices and volumes. Operating result is significantly below previous year's levels. You can see that it turned downward from 20 million euros in H1 last year to a 5 million euro this year. On the positive side, in this reporting period, we benefited from an insurance compensation related to the flood damage at the Austrian plant , which we discussed also in recent quarterly calls with you. Let's move on to the food segment. And as I said, this was really positive to note with the Zypsoga Group having a robust and resilient portfolio. You can see that the development in the food segment is positive compared to prior years, H1. We do see an increase in revenue from 824 million last year to 858 million this year. And the operating result also came in above prior years, reaching 86 million, 68 million euro. I always mix bigger sometimes, yes? So 68 million, you can see in the middle of the right-hand side, 68 million positive. So let's move on to the remainder of the income statement after having had this look on the segments developed and operating profits. So, in income statement, you can see that after six months below operating profit, the result from restructuring and special items amounted to a minus 33 million Euro versus a plus of 30 million Euro. This was largely attributable to the sugar segment in addition to the special product segment. When it comes to the results from companies concentrated at equity, this also amounted to minus eight. and is alongside the starch segment and the sugar segment. Looking into the financial results, you see a minus 70, which is also higher than last year, where we had the financial result at a minus 51 million euro. So, what are the reasons for that? We have to look on both the pure financial interest side and the other financial interest side. When it comes to the pure financial side, when it comes to the interest side, here we can see that here is a minus 53 million Euro, and this is linked to higher interest expense, which is due to an average increase in interest rates. So for this reporting period, we have an average interest rate of 3.7% compared to a 3.4% in the previous period. Net financial debt on average in this period was roughly stable at 1.9 to 2 billion euros. And when it comes to the other financial results, this is mainly attributable to exchange rate losses, which are linked to the weak U.S.

dollar and the weak mortgage bond. Moving on to the taxes, you can find it on page 19.

So, taxes on income in H1 came in with a plus of 9 million euros compared to a minus of 74 million euros in the same period of last year, and this is based on earnings before taxes of minus 69 million euros in the current year versus a 235 million euros in the first six months of 2425 fiscal. So, finally, looking to earnings per share, Not a positive figure and clearly disappointing for us. Earnings per share at the end came in at a minus 38 Eurocent against a plus of 61 Eurocent in the prior year's period. Let's have a short look on cash flow working capital investment. You can find that on the following pages. So I start with cash flow on page 21. You can see in the graph or in the table Due to the decline in operating results, cash flow also decreased in the reporting period now to 67 million euro compared to a 343 million in previous period. We do see a decrease in working capital, which is positive. On the investment side, CapEx side, investment into fixed assets reached 219 million, so we are on track with reducing CapEx. and investment financial assets and acquisitions are not meaningful in size. When it comes to the financing activities, so Suitsuka had been very successful in refinancing our debt positions. So here you can see I have a particular look on the new 700 million hybrid bond, which we issued successfully in May 25. So this is reflected also. You can see that in the cash flow statement. So, we issued a new 700 million hybrid bond via our Dutch subsidiary, Super International Finance. We financed the existing hybrid bond, which was also worth 700 million, which was issued in summer 2005. And the increase and decrease in stakes held in subsidiaries in Capital Biotech are linked to this transaction. So we move on to the balance sheet, which you can find on page 23. So when it comes to net financial debt, by end of August 25, net financial debt stands at 1.674 billion. The cash inflow from operating activities of 255 million includes, in particular, the cash flow of 67 million euro and a strong decrease working capital, and as I said, investments into CapEx amounted to 219 million. So in total, the net financial debt is rather stable compared to the 1.654 billion euros where net financial debt stood at the end of last fiscal, 29 of February, 28 of February, 25. Equity ratio is still solid, so we stand with an equity ratio of 45%, so this is a solid level. Let me now turn to the outlooks, which we can find on page 2526. So, unfortunately, we had to revise downwards our operating profit guidance for the group on August 21. That was the MIR. guidance that you have seen. So on August 21st, we updated the group guidance for the full fiscal 25-26, and we expect the group revenues to come in between 8.3 and 8.7 billion euros. That's in the middle of the graph down, and operating reserves to reach between 100 and 200 million euros. This compares to our previous guidance of 150 to 300 million euros, so it's a downward of our forecast, which we had to do on August 21st, but we do confirm this number as of today. So, what has changed compared to our previous guidance before going into the details? So, overall, it is unchanged now for the group, but we do see a decrease in the sugar segment. So, sugar segment is updated. We have not changed the outlook for special products and starch. We do see right now a slightly better improvement in crop energies, and we do see a better development in food. So this is also linked to what I've already stated. So it's a robust portfolio, and we have different developments in the different segments. So coming to sugar, for the sugar segment operating results, is now seen in a range from minus 850 to minus 250 million. Our previous forecast was between minus 100 to minus 200, so there's an additional burden to be seen given the bearish sentiment on non-prices, which I've just explained, of 50 million euros in sugar segment. Special products segment unchanged. We currently expect the operating results to decline significantly due to the anticipated rise in cost, which I already explained. For crop energies, the development is the following. So, in the segment of crop energies, we expect significantly weaker revenues. This is due to lower average ethanol prices compared to the previous year, as well as technical issues, as just explained, following the scheduled and unscheduled maintenance. At the same time, net raw material costs have gone down compared to previous year, and what is positively to note, ethanol price in the European market, they have just recently started to rise again, which is positive. All in all, we expect the operating result for crop energy segments to be on the same level as last year. Already stated for starch segments, no change. And for the food segment, following an already very successful 24-25 fiscal, we now expect a slightly improved operating result compared to the previous year, as moderately increased prices are helping to offset the impact of rising costs. So all in all, our group guidance is unchanged compared to the downward revision on August 21st, and we do see group revenues in the range of operating profit between $100 and $200. Looking at the other KPIs for our forecast, you find that on page 26. So for group ABDA, the range is expected to come in between 470 and 570 million with the explanations complete for as I just stated in operating profit. Depreciation is expected to be on previous year's level. CAPEX is expected to remain below prior year's level, and when it comes to net financial debt, we do project net financial debt to remain rather stable compared to the end of past fiscal. So, ladies and gentlemen, after this review of our H1 figures and the forecast, so as a summary before closing to and coming to the Q&A, I would like to that as expected, the challenging market environment in our core sugar segment has continued in the second quarter of this fiscal. Market prices started to improve, but not as much as anticipated. Our non-sugar business continued to be a stabilizing factor. But as a consequence, we had to revise downwards our operating profit forecast for this year in August 25, but we do confirm this as just explained as of today. When it comes to financing, we are very proud that we have successfully issued this 700 million euro bond in May, and now we successfully completed our refinancing activities. There is a 500 million senior bond also successfully issued in January 25. And this covers the refinancing of the senior bond maturing end of November 2025. Together with the extended and increased to $800 million syndicated loan, we have established a solid and reliable financing structure for the years ahead. And as I said, I'm very proud of Süßvogel and the entire Süßvogel finance team who achieved this refinancing over the last month. Also, what is new in the, but also already communicated for Sitzucker board since October 1st, we have Teresa von Fugler on board. We are very happy to have her here with her expertise, and also here from my side and from the entire team, a very warm welcome to her, and we are very much looking forward with her to further work on the success of our Sitzucker group, and a very warm welcome to Teresa. So thank you very much to all of you. So far, we are now happy to take your questions, and together with Andreas, I'm happy to give the answers that you might have to these figures.

Thank you very much so far.

We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their telephone. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press star and two. Questioners on the phone are requested to disable the loudspeaker mode while asking a question. Anyone who has a question may press star and 1 at this time. The first question comes from the line of Karina Edias from Barclays. Please go ahead.

Hi. Thanks for the presentation and thanks for taking my question. I just wanted to go back to your point on the guidance. So just trying to look at the implied guidance for the second half. Does it imply that the press for sugar or the contracted press for sugar would be probably with the crown would be about 100, more than about 100 per ton in the recent contracting? Any credit there would be very useful, especially as you think about the start of 2027. And then just going back to your point, I think, on the net debt, you know, your leverage obviously sticks up. That's partially because of the lower EBITDA. What type of leverage are you comfortable staying in and out longer, especially as you think about potential actions from leading actions? Thank you.

Thank you, Karin, for your questions.

When it comes to sugar prices, I cannot disclose our individual prices. So sugar prices in our market is a competition-sensitive information. So what I can comment is available market data and just very broadly expectations. What we did say at the beginning of this fiscal, when we put up our budget, we stated that that when it comes to the sugar availability in Europe, we did foresee a decline. And this decline that we had foreseen was linked to the fact that we, on our side, decreased the acreage significantly by roughly 15%. And if you look into EU market data, the overall trend for hectares, so on, for beets in this sugar marketing year was also decreased by roughly 11%. So given normal harvest, we would have seen a strong decline in beet availability and the sugar availability in Europe. And this was the base assumption for our assumption that sugar prices should rise. At the end of the day, they really, they increased, yeah. but they did not increase to the extent that we have foreseen originally, and that was the reason why we had to revise downward also the developments in the sugar segments. In a nutshell, yes, there is a price increase compared to last year, but not to the extent that we have foreseen, because sugar availability and the harvesting conditions, they are much better than we have anticipated. When it comes to net financial debt, we are... Rating agency staff revised downwards our rating and what are the levels we feel comfortable. This is clearly if net financial debt over cash flow or ABDR is below 3.5. We are not yet there, but we work hard on that, and what we feel comfortable is 3.5, and there's a clear commitment from the board to investment-grade rating, and so we have put into place the measures to reduce costs. We go into all, in every cost position, do all our best to increase capex, but decreasing capex is not so easy because you have ongoing projects with contracts in place, but what we can do to cancel or postpone, we do, and all in all, we strive to come below 3.5 net debt over ADTR. But it's not the case as of today, but this is our ambition level, yeah.

Understood. Thank you. Best of luck. Thanks.

Thank you.

The next question comes from the line of Hartmut Mörf from Mitalian Research. Please go ahead.

Yes, good morning. I have a couple of questions and probably we could go through them one by one. So the first one... would be on the sugar segment here. What we find basically in the second quarter is roughly the same level below the sales level of the first quarter. I mean, you should have basically a similar price level, at least with regard to the predominant part of your business, as your October contracts still lasted into the second quarter. But usually you tend to have better volumes in the second quarter compared to the first. So one would have or one could have thought that your sales increase in the sugar segment in the second quarter compared to the first. So what was the reason here for being just south of that level? And you still had quite a number of special items in the sugar segment. How shall we look about that going forward, meaning would that now something related to the shutdowns you had on the iguana side of the business? And is there coming more with regard to the cost optimization measures you're just taking? So how shall we look about that going forward? So that's on the shorter segment.

For the volumes and price development and sugar, I tend to rely more on H1 figures than on individual quarters. because you can also have some shifts, yeah. So for me, the more reliable way to look at it is really H1 as total. And we do see for the six months that there is both a decrease in volumes and a decrease in prices, yeah. So we do see that the environment for sugar, there is some volume decreases and also for prices.

H1 versus H1 last year, or?

Yeah, yeah, yeah. H1 to H1. Compare H1 to H1. So there we have lower value volumes and lower prices. And the lower volumes, they are across all markets. It's not one particular market or specific region. For us, it's an overall trend that we have reduced volumes.

Okay. And going forward for the coming year, you're staying roughly level in terms of volumes. Is that a fair assumption?

Yeah, that's a fair assumption. But we have to see, we did see some reductions in sugar consumption, for example, in beverages. Yeah, there's less sugar in beverages. And we also do see, for example, less chocolate salt. This is linked to the fact that cocoa is very expensive, so there is less chocolate and thus less sugar into chocolate. These are trends which can change, but for the time being, there's a slight decrease there, and we have to monitor this also. Okay. Thank you. Second one would be on, yes? On restructuring. So within the restructuring side, so this, as I said, particular link to the sugar segment, And this is a follow-up cost of the restructuring we had, for example, with the closure of the two plants, Leopoldstorf and Hushuvani, for example.

Okay. But is that finished now, or shall we plan with further one-off items in the coming quarters?

When it comes to those two plants, it's finished. But when it comes to... special items coming forward. The issue of special items is that they are not really predictable. So we cannot exclude neither that it's the state of it, but it's also part of the additional special items could come up in Q3, Q4. So we have to, when you do the, when you start to do the planning for the years to come, we have to do our goodwill impairment test and all of that, but this will be then in Q3, Q4. It's too early to say whether they can be additional one-off items, but I cannot exclude them.

Yes. I mean, but there's nothing scheduled so far. So in terms of cost optimization or something, there's nothing you have in your budgeting right now.

There are some special items also from the first six months when it comes to restructuring, when it comes to personal or severance payments, that is possible. So what is executed on the table at the end of August, that means for the first six months this is included, but for sure there can come additional points can come up in the development of Q3, Q4. They're not excluded, but it's too early to say.

Okay, thank you. With regard to crop energies, all your technical issues and so on, this is finalized now. So my question would be with regard to capacity utilization. So obviously you had a rather low capacity utilization in the first half of the year due to these issues. But are we now looking to a more normal level again or are there any reasons why your one or the other side might not work at full capacity in the second half of the year?

There's nothing scheduled, and as I said, the market environment for biofuels as a total is positive. This is also the reason why prices have gone up significantly. There was a strong driving season, and on the months to come, there's nothing particular to see, but I would assume a high capacity utilization unless... other technical issues would arise. But from the market perspective, there's good reasons to use fully the equipment we have.

Perfect. And then I would like to come to your outlook. I'm a bit lost here. So what you're saying compared to what you said on August 21st, you have somewhat reduced or specified the range for your sugar segment, which is a bit weaker than what you expected still in August. and you have compensated this with a more positive outlook on the crop energies on the food side. But looking at the extent of the changes, I would, I mean, you've upped, fruit by one notch, which is, you know, maximum of 4%. On crop, Europe, you have also 5, 6, 7 million, so to come to 22 million. But if I took the midpoint of your new sugar guidance, which would be minus 200, it would basically impossible for you under the indications that you have given to reach the midpoint of your group guidance. You would be somewhat below that and that already would assume that in particular starch and special products would also materially improve in the second half of the year and we would not look at run rates of the current Q2 level. So is what you're saying that we should rather look on your group guidance, not at the midpoint, but rather at the lower end of your guidance, or how should we interpret this?

Hartmut, as you said, nothing to be confused. It's exactly what you said. So we confirmed the group guidance 100 to 200. And we are slightly, for the group guidance, we are slightly below midpoint, but close to midpoint. But rather, we are not at the lower end, but we are close to midpoint, but slightly below midpoint.

Okay. That's fair.

Okay. But not to an extent which would force us to update the guidance, you know, the rules of MRR. So we are close to midpoint, slightly below.

Okay.

Now that's...

Let's say feasible under the assumption that special products and starch would make a major jump from the Q2 level to the north. Then you're right exactly what you're saying. But you can confirm that this is the assumption then? Yeah. In starch and special products, Q3 and Q4 will be significantly better than Q2.

As I stated at the beginning, we do not give particular ranges or points for the segments, so our main focus is on group level. As I said, it's a robust portfolio. We have different developments in the different segments, and the other thing that is also true, I said, that we believe that Q3 should be the turning point to the better in all of that, but your analyzing is fully correct. We confirm group guidance under €200 million.

Perfect. Last point would be on the cost optimization measures you mentioned earlier. Could you just give us an update on that? I mean, you've already mentioned size, but could it become a bit more precise on the timeline and also I mean, you have said in the last call that the cost optimization is roughly split 50-50 between sugar and between Südsukker and Agrana. Would you be prepared also to give a split between sugar and non-sugar divisions?

This is unchanged. This is still true what I said in recent conference calls. We have initiated a lot of cost-saving initiatives. We are here on track. and the different amounts that have already been communicated, we still stick to them. So, in total, we strive for savings of 200 million euros for the Sitzucker group, which are to materialize in the coming years. For this fiscal, it is still our target, and we are on track for 80 million cost savings, which is half of half where Agrana and then Sitzucker. Agrana has the program called Next Level, And here they strive up for savings up to 80 to 100 million euro per year starting in 27, 28. So we are really . This program is called Optimum. It strives for 100 million savings in the sugar segment, also coming into effect fully in the next three years. So we are on track. But it's not that all of the amounts are already visible this year, so this will build up. But in general, we are on track and there's nothing a change to previous communications on our cost-saving measures.

Okay. But just to make that clear, the 100 million coming from seed sugar are 100% sugar. There's nothing in the other divisions, in your other divisions?

No. In total, we strive for 200 after, let's say, three years, and this is 100 for sugar and 100 for the others.

Okay. Okay, thank you very much. That was very helpful. Welcome.

As a reminder, if you wish to register for a question, please press star and one on your telephone. We now have a question from the line of Oliver Schwab from Warburg Research. Please go ahead.

Good morning, gentlemen. Thank you for taking my question. May I come back to crop energies first? I appreciate that you are flexible enough to notch up your outlook following the increase in ethanol prices. And you already have given some remarks regarding the reasons behind that. However, I guess driving season should now be over. We still have the problem of U.S. imports into the European markets and so on and so forth. So I'm wondering what you think, how sustainable this increase is given the overall structural situation the European market is in. And that would lead me to my second question of your U.K. asset answers. You stated that you are looking for full capacity utilization in the second half of this year, and I guess that very much includes ENZUS then. So what's the stages of this last remaining asset that the UK has? It seems like especially the U.K. market is under heavy pressure given that they have made trade deals with the U.S. that might be less favorable for the U.K. bioethanol industry, and one of your competitors has already pulled the plug on his plan, so yours is the only remaining one, and I'm wondering what's the situation there. And lastly, could you give us an update on your future, let's say, value chain that you are currently trying to expand into chemicals, given that the chemical industry in Europe has a lot of structural problems at the moment and is shrinking, so your upcoming production once those assets currently under construction have started up. I guess your customer base must or your potential customer base must have shrunk and those who are still in the game, they currently have problems regarding their when it comes to pushing their volumes in the market. So how welcome will your product be coming in addition to what already available in the market. That will be my three questions on crop energy.

Thank you. For ethanol prices, so when you look into the fiscal, so we had ethanol prices between, let's say, roughly 600, quite stable over the last, since the start of this fiscal, so starting with 700. forecast was to see 700 and plus, but the prices, in fact, decreased to roughly 600 since the beginning of this fiscal. And what we did see over the last, it started in September, but materialized in October. Now the prices have jumped over 800. If you now ask me whether I believe this to continue, I just have to say I cannot give you a promise because We see, as we always state, ethanol prices are volatile. For sure, there is always the risk of major changes, be it on the tech side, be it on the import side, be it on bilateral agreements between countries. So it's really difficult to predict. But for the time being, we see 800. If you look into the forward curve, there's still a backwardation. So the anticipation is that this 800 is not to last. but there are good reasons. Also, when I look into supply and demand, there is not too much volume in Ara, Antwerp, Rotterdam region. So I believe that prices should be supportive, but I cannot give you a guarantee. It is still volatile markets. It's commodity markets. It will depend on factors, but from the supply and demand side, or especially from the demand side, there's robust demand for ethanol. But for sure, there's no guarantee. We are very happy with the price increase to be seen how long and to which extent this will last. But we have taken this into our forecast to a certain extent with a better price assumptions that we have seen so far. When it comes to ENSUS, when I said we strive for full capacity utilization, there's a question mark still on ENSUS. So the negotiations with the UK government on a support package are still ongoing. I cannot disclose any details. We are confident because we believe ENDOS is really significant to UK industry, be it on the ethanol side, but also on the CO2 side and the coproduct side. So it's an important player in the industrial landscape of Britain. So we hope that the discussions or the negotiations with the government would find a positive end, but the act cannot disclose, and it's not finally decided. but you have seen that from the competitor has stated to stop production, we are still in negotiations with the government. So, there's a question mark on ENSOS. Your third question was on bio-based chemicals. It is true, your concern comes from the point that climate mitigation measures are under discussion. This started with the Trump administration putting into question climate change focusing much more on fossil fuels. For sure, this is at present a trend or a downward trend for climate protection measures, but this does not lead us to change our strategy. We still believe we need green carbon hydrates. We have to get rid of fossil fuels, be it in the transport sector, be it in chemistry, and we continue with our project as foreseen. Start of operations is to come as foreseen, and we do have still positive discussions with potential customers. The product that we want to produce is ethyl acetate, which is a solvent, which is needed for many also very interesting products, be it solvents, be it paintings, be it coatings, be it adhesives. It goes into nail polisher and , so this is really interesting products, and our customers, they also have very much interest in having this green product, so there's no change in our strategy, but I confirm the overall framework climate mitigation measures have changed, but I believe this to be not a continuous trend, because I think we will all have to do our best to reduce our carbon footprint, and we will continue to do so. Thank you for that.

I guess I'll step back into the line and ask the next bunch of questions after that.

Thank you. Okay.

The next question comes from the line of Sedu Sharda from Barclays. Please go ahead.

Yeah, hi, good morning. So my question is, what was the achieved average price in sugar marketing this year? And was it in line or lower versus last year? And what is your exposure to spot prices move over the course of the next 12 months?

As I stated, I cannot disclose sugar prices because we are in a commodity market, and for competition reasons, I cannot disclose any precise numbers in sugar prices of sweet sugar. As an overall trend, and you will find this in our investor slide that you have to rely on available market data, and what you can see is both from the world market sugar market market prices, there is a downward trend. since the beginning of the fiscal, and the same is true for European sugar prices. They have declined significantly, and based on the European sugar prices, you can make your calculations, but because typically our prices very much rely on European sugar prices, but I cannot disclose individual sugar prices.

Okay, and what is your exposure to spot prices, like how much you have contracted?

Our exposure to spot prices is not meaningful in size because typically we do one-year contracts with customers. Those customers do foresee a certain flexibility in volumes. So we have a certain development. It also depends on some regions have more spot contracts than others. But all in all, spot contracts or spot volumes are not meaningful in size. We do have yearly contracts.

Okay, thanks. And one more thing, like, can you give some color on what has changed in sugar production, your expectation versus Q1 stage? Like, there was a mention that you expect better harvest.

So when it comes to Europe, that's what you have seen on, go back to on page 11 for Europe, it is seen that production should come out in 25, 26 at 15.9 compared to 17.0 in last year. So there is a reduction in European sugar production, and what has changed is the extent of this decrease. I would have assumed, or we have assumed when setting up our budget, we have assumed a stronger decrease, and this stronger decrease was based on the fact that we knew from our side that we decreased significantly the acreage in our regions. And for all Europe, the decrease in acreage was 11%. That was the number that was known, let's say, in March, April, when we set up our budget. And that means given a normal harvesting condition, so let's say, for example, based on the average of the last five years, this would have led to a significant decrease in acreage. eat and thus sugar production. What has changed and then what we also anticipated leading to reasons for lower sugar production was the diseases that we have seen last year. So, one is called Stolbauer, the other SBR, Syndrom Wasriches, and what we also have included in our initial forecast was a very dry summer. Yeah, that was, we called it at the time when we lastly discussed. We called it our 75 percentage scenario. When setting up the budget in March, April, the projections for the weather conditions in summer indicated a very dry and hot summer. And this would have led to the fact that also the production measures would not have been very effective or it was unclear to which extent those measures would have been effective. And this led us to our initial forecast. with a much lower sugar production. At the end of the day, when this is now what has changed, July came out very wet and cold. That was beneficial to the beets. The same was true for August. Here the weather conditions have shown sunny days and rainy days and cold nights, and this is the perfect mix for the beets. So what we do see today, and this is not what we have expected, we do see a very good harvesting conditions in Europe. So there's much more beet and solid beet and without diseases available for this sugar campaign, and this was not what we had anticipated in our initial budget. So it's positive for the farmers, but given it leads to a much better sugar availability in Europe, this has brought us a very sentiment on the prices. And this was the reason why at the end of the day we had to decrease our forecast for the sugar segment.

We have a follow-up question from the line of Oliver Schwarz from Barbrook Research. Please go ahead.

Actually, it's more than one. I'm sorry about that, but hopefully I can... Oh, we still have time, Oliver. No problem. All of my questions. Sorry for that. Firstly, Stas, you're talking about higher raw material costs given grain prices have declined due to... only have a strong harvest in sugar, but also all other crops seem to be affected. Positive volume development all over the place, and that obviously also puts pressure on grain prices. Still, in starch, you're talking about higher raw material costs, which makes me wonder, Is that still, let's say, a remnant of hedging in regard to raw material cost that will cut off over time, or why is that?

Yeah. As I stated, so in H1, compared to H1 previous year, we do see higher raw material and energy cost in starch segments. So this is true for the corn prices. This is true for the wheat prices. And this is also true for the energy. It is true what you said, that when you look at Martiff quotations, grain prices have come down. But it's also always a question of hedging. What hedging positions do you have? This can have an impact. So I cannot disclose all the details, but hedging can have an impact. And also, it has an impact in the regions where you buy your grain or corn or whatever. So Martiff is always the price in Rouen, France. And typically, you have plus and minuses in different regions. And so, this can lead to the fact that even if prices go down, you can have different prices depending on ability in certain regions or quality in certain regions. So, all in all, this led to the fact that for the starch segment, unfortunately, we do see compared to H1 last year, higher raw material costs in all the three segments. It's true for corn, it's true for wheat, and it's true for energy.

Would that be true also for H2, or is this trend to reverse in H2?

I don't have that figure in mind. Sorry. We will have to see. I mean, we have the full year guidance, but I do not have on hand the different assumptions for those cost components for star systems. I don't have that with me.

Yeah, I get that. But if it's solely, let's say, a function of your hedging position, I guess you should have an insight with that. But we can do that at a later stage, no problem at all. Second question is on fruit. Obviously, the bright spot in your portfolio at the moment is When looking at the sales development and looking at the comments on volumes, it seems like more or less stable volumes. The sales are not greatly up, which indicates that prices are mostly unchanged as well. So this increase in profitability must have had something to do with lower costs. Is that a result of cost-cutting measures? So is that something that is company-specific, or is that lower raw material costs that might have to be passed on over time to customers?

There's not one answer putting everything into, or one silver bullet answering everything. So because we have to, when we talk about food, there are two divisions. So one division is... food preparation, the other one is food concentrates. And the development in those divisions is not parallel. It's both of them are positive. They show an increase in operating profit and in turnover, but the development within the cost positions is different. Your question, for sure, we do all to, we are we do all to reduce administration costs and so there's one aspect of that into that. But particularly for the food, we do have also increase in material cost. So this is still true. This is true for food preparation. So there is an upward trend for those food components that we buy. And the same is true for the, in the concept business, also the truth concepts, they show an increase in material prices. But we have a good development on the pricing situation. and on the other costs. So it's a mix of all, but it's not one explanation that fits for all of the divisions. But in general, material prices go up.

Okay. Thank you very much for that. And perhaps can you, I know it's perhaps a bit delayed now, but can you share your key thoughts about, let's say, the exchange of your hybrid bond? Obviously, the new hybrid bond is a bit more expensive than the old one was when it comes to the coupon. You had costs regarding issuing the bond and also costs in regarding to buy the old hybrid bond back. So there needs to be an upside somewhere. Given that we are looking for interest rates to rather go down than go up, At least that's my takeaway from the markets at the moment. It seems like the only caveat that is out there is that the new bond doesn't have this operating cash flow covenant that the old one had, which basically implies that you might not be that confident with future bonds. operating cash flow development so that some breach of that covenant might be or might have been in the cards in the foreseeable future. That would be my takeaway, but I guess you can easily talk me out of that assumption and give me a better reason for that exchange.

Oliver, I wouldn't subscribe to that fully. For us, the main reason really was the that the old hybrid was dated from 2005 and was at the time one of the first ones, but now was also the last one. So it was my objective to really to modernize the entire financial situation of the balance sheet. That means I wanted to review and modernize together with my team the entire financing. This is you have to put this into context of the entire refinancing. We did more than $2 billion refinancing in the last months, so this was very successful. We issued, as I said, the new $500 million senior bond. We did modernize the revolving credit facility with our core banks, increasing that from 600 to 800. We did a – we still have in place the – sorry. The commercial paper is still in place. We have the senior bond. We have the hybrid bond. We put into place a factoring program, so we modernized everything, and part of this modernization was the hybrid, and I'm very happy to have this new 700 million hybrid bond now on the balance sheet, which is fully in line with all the other hybrid bond structures which we see. of a modernization of the entire balance. This really puts us in a good position going forward. The entire refinancing is done, and so this is positive.

I get that modernization sounds very positive, but what is actually the advantage for Südzucker from the new hybrid bond versus the old one? What is, in those terms, more modern than the old one was.

The modernization of the hybrid one now is fully in line with all the other hybrids in place. So it has no more a cash flow trigger. It has the, so it's fully in line with the others, and for sure this is an advantage not having the cash flow trigger.

Okay, so it is the cash flow trigger. That is the advantage, not to have it. That's what you said. That's not what I said. What did you see? Okay, let's leave it like that. Okay, thank you very much for that. And lastly, and I promise that's my last question, could you talk me through the bridge from the EBITDA to expected net debt level? Given the fact that after the first six months of the current fiscal year, we saw an increase in net debt by give or take 20 million euros. You are aiming for a net debt level of 1630, which is basically currently around 40 million lower than the current level. Your guidance is out of 100 to 200 million for the full year, so that gives you 50 to 150 million additional EBIT for the full year. Could you talk me through that stable, the bridge from that increasing EBIT, especially in the second half of this year, to the changes in net debt? Are we expected to see an increase, so some reversal of working capital in the second half of this year? especially as Zytsuga tends to pay its sugar beet farmers for the harvest in the second half of this year. Thank you.

So this is Andreas speaking. Maybe I can comment on when it comes to the operating cash flow. To start there, as you indicated, results are down, but we are also expecting a significant reduction, which already started. and the first half a significant reduction in our net working capital. You have also seen that within the first half year, the CAPEX levels are lower than in previous years. That trend should continue also in the second half of the current fiscal year. The combination of those things should come out in a way that our net financial debt position by the end of the year we expect to be rather in the ballpark of what we had by the end of 2024, 2025. So the lower operating results should be compensated basically by the net working capital. And obviously, the dividends, when it comes to what we paid on dividends this year, it's also a much lower number than in previous years.

Okay. Maybe I didn't make myself clear that much. Sorry for that. I was specifically asking for the developments in H2O. You've got 50 million, let's say, EBIT under your belt, give or take, for the first half year. Your guidance is out there for 100 to 200 million. That gives you a residual number for the second half year of 50 to 150 million in EBIT. Currently, your net debt is up compared to the beginning of the fiscal year by 40 million. But by the end of the fiscal year, we are looking for basically the same level as last year. And I was just wondering how does that compute given that you just said CapEx will be lower compared to last year and working capital releases might continue in the second half of this year. How does that compute with coming up with net financial debt on the same level as last year?

Thank you.

So we expect a continuation of our working capital, let's say, improvement process that we indicated or that we already started, and that should contribute or this is our expectation that this contributes to the offsetting the low operating results. And again, when it comes to capex, also in the second half of this year, the number is not as significant. Dividends are already paid. So, when it comes to the balance of our net debt position, that is in line with what we see in the numbers. Yeah.

Maybe we are running out of time, so maybe we can postpone it to a later moment. But what you can take as for the minutes, we do foresee that net financial debt at the end of this fiscal should be roughly in line with last year. Yeah, but isn't that very conservative?

Shouldn't it be low?

I think we have to stop it. I mean, our assumption is at the end of the day, we strive for having net financial debt on the same level like last year. Got it.

Thank you very much.

Thank you.

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

Thank you very much, and thank you very much to all of you for your participation and your interest in . Also, thank you very much for your questions. As Stefan already indicated, when it comes Additional question that should come up in the aftermath of this call, we as the investor relations departments are always available via phone or email at any time, and obviously we are trying our best to come back to you as quick and fast as possible. Presentation of the Q3 figures will be held in the beginning of January 2026, and until then, I wish you all the best. Stay safe and take care and talk to you soon. Thank you very much.