The Vienna-based sugar, starch and fruit group said in its first quarter trading report for 2007/2008 that overall sales revenue decreased by 5 per cent to €449m from the €472m in the same quarter in 2006/2007.
"While the starch and fruit segments grew substantially both in revenue and earnings, the sugar segment saw a revenue decline in the first quarter of 2007/2008," said Johann Marihart, Agrana's chief executing officer.
"This contraction resulted both from an unusually strong year-quarter that included the very high C sugar exports still possible at the time, and from the adverse effects of the reform of the EU sugar regime that are now coming into play."
Overall operating profit was €28.2, compared to €35.1m in the first quarter of 2006/2007, due to the performance of the sugar segment. Operating profit for the sugar sector was down to €7.8m from the €22.6m in the same quarter in 2006/2007.
It said the decrease was caused by the WTO ending C sugar exports, and the restrictions of the EU export policies.
In comparison, sales revenue in the starch segment was €77.5m for the quarter to 31 May, which was 30 per cent higher than the €59.6 per cent in the same quarter the previous year. Revenues for the fruit segment were also up at €216.8 per cent, 19 per cent higher than the first quarter of last year.
It said profits for the starch segment were up due to the upgrading of its product mix in favour of higher-value-added starches.
Following the €45.1m Agrana invested in the first quarter of this financial year, the company has plans to invest more than €200m within the rest of this financial year.
"In the sugar segment, this investment is to serve the further expansion of our strong market position in central and south-eastern Europe, particularly the Balkans," the company said in its report.
It has already invested €6.3m in the sugar segment in the first quarter this financial year, compared to €3.4m last year. This includes the joint venture with Bulgarian sugar company Zaharni Zavodi AD in April 2007 to launch a packaging and distribution business, as well as the construction of a raw sugar refinery in Bosnia-Herzegovina. It expects this factory to come into operation at the end of 2007.
It said work on the biogas plant in Hungary is well underway, with positive results from the five months pilot operation. Agrana said this will be the first industrial-scale biogas facility in the European sugar industry.
The company has twelve production sites in five EU member states, and looks to make investment in expansion across Europe to help drive profits.
"In the starch segment we will bring our bioethanol plant in Pischelsdorf on stream in autumn 2007. Likewise, the increase in corn processing capacity at Hungrana will be a positive driver of our revenue trend. In the fruit activities, we intend to make further strides in our international expansion."
Agrana supplies sugar to consumers and manufacturers, and claims to be one of the leading sugar companies in central Europe. It holds a 90 per cent share of the Austrian sugar market, as well as 39 per cent in Hungary, 22 per cent in Czech Republic, 30 per cent in Slovakia and 48 per cent in Romania.
