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Suedzucker quarterly profits surge, sees higher full-year earnings

A company logo of Suedzucker Group is pictured at the headquarters in Mannheim

HAMBURG (Reuters) -Europe's largest sugar producer Suedzucker on Thursday posted a rise of almost 80% in quarterly earnings and again forecast increased full-year profits, despite higher energy and raw materials costs, supported by the strong performance of its sugar and biofuel sectors.

The company expects to be able to pass on higher costs in increased sugar prices but its performance in coming months will depend on sufficient energy supplies being available after Russia cut gas deliveries to Europe, it said.

Suedzucker said operating profit in the second quarter to the end of August of its 2022/23 fiscal year rose 79.5% to 153 million euros ($148.44 million).

A strong performance by its biofuels unit CropEnergies supported, it said.

Suedzucker repeated its forecast in August of a 2022/23 full-year operating profit of 450 million euros to 550 million euros, up from 332 million euros the previous year.

The European Union will remain a net sugar importer in the 2022/23 season and Suedzucker will enjoy a positive market environment, the company said.

"This should enable Suedzucker to pass on the drastic increase in raw material and energy costs with significant sugar price increases beginning in October 2022," it said.

In Europe, the sugar beet area for the crop this winter is down by about 4% on the year, it said.

"World and EU sugar prices continue to rise and we are confident we will achieve a further improvement in prices for Suedzucker’s production in coming months," a Suedzucker spokesperson told Reuters.

"This year’s sugar harvest processing campaign started in September and is so far progressing well, rain in recent weeks in Germany could provide a late positive impact on crops.”

Suedzucker has in past years been actively seeking more gas use as part of its carbon-reduction programme.

"In past months, alternative energy sources to gas have been assessed for all our sugar factories such as coal or oil,” the spokesman said. “But we are still predominantly using gas.”

(Reporting by Michael Hogan, editing by Miranda Murray, Robert Birsel)