Tereos does not rule out closing a sugar unit in France

Band Sybille de La Hamaide

PARIS, June 9 (Reuters)French sugar group Tereos could close part of its capacity in France as part of a wider review of its strategy, as it anticipates further declines in sugar beet production, it announced on Thursday.

Tereos, France’s leading sugar producer and second in the world thanks to its sugar cane activities in Brazil, has always said that it would not close factories in France, unlike its competitors Cristal Union and Saint Louis Sucre de Suedzucker, which closed some in 2020. SZUG.DE.

“The reality of yesterday is not necessarily that of tomorrow,” Olivier Leducq, director of Tereos Sucre Europe, told the press after the presentation of the group’s annual results.

He said the review was ongoing and a reduction in capacity did not necessarily mean the complete closure of a plant.

The area of ​​sugar beets sown by members of the Tereos cooperative has decreased by 10% over the past five years and Leducq said he expects it to decrease by another 10% by 2024.

Sugar beet production in France has been steadily declining since the end of European Union quotas in 2017. Farmers have been discouraged by low prices and, more recently, by diseases that have ravaged crops.

At the same time, Tereos is facing overcapacity in Brazil where the group suspended for a year the operation of its sugar and ethanol plant in Severinia northwest of Sao Paulo to optimize production between its refineries after a bad cane harvest.

Chief Financial Officer Gwenael Elies said the decision to halt operations at Severinia was temporary and would be reviewed next year. The group has no plans to sell the unit, he said.

Lower production and high costs, mainly due to soaring gas prices, are expected to push up sugar prices in Europe in the fiscal year to March 31, 2023, while global sugar prices sugar are expected to remain near current high levels, he said.

High ethanol and sugar prices have spurred investor interest in Brazil, where nearly 30% of cane crushing capacity sits idle.

(Reporting by Sybille de La Hamaide; editing by Barbara Lewis)

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