The sugar, starch and fruit preparation company experienced revenue of €1,418.7m in the first three quarters of 2007/8, up from €1,380.4m in the same period the previous year.
"The reform-driven decrease in sugar revenue was successfully offset in the first nine months by Agrana's other two revenue streams," said CEO Johann Marihart.
"However, the 2007 calendar year brought price increases in raw material markets on a scale that poses a considerable challenge to all segments of our business. In this environment, the steady third-quarter operating profit after exceptional items is in our view quite a satisfactory result."
Sugar segment
Export opportunities have been limited since EU agricultural ministers established a sugar reform to improve competitiveness and market-orientation of the EU sugar sector and to guarantee its long-term future.
The absence of C sugar exports and lower sugar sales due to the preventative quota withdrawal were responsible for the revenue decrease of 9 per cent in the sugar segment during the first three quarters, dropping to €595.3m from €652.8m.
The company invested €34.9m in the sugar segment, putting the largest proportion of finances into the construction of the new raw sugar refinery in Serbia.
At the same time, Agrana has closed its Hugarian sugar factory in Petohaza and had to cover its closure costs.
The operating profit for this financial year's third quarter was €29m, which decreased dramatically by 24 per cent from €38m at the same time in the previous year.
Fruit segment
The fruit segment is Agrana's highest earner, despite weather-induced crop failures in Europe leading to an undersupply of raw materials and volatility in the market.
This has led to price hikes for raw materials, affecting every process in the food industry, with the increased price of feed getting transferred from farmers onto ingredients' producers, then onto manufacturers and retailers.
However, Agrana has gradually implemented price increases to absorb the sharp rise in raw material costs. It also closed its Czech fruit processing facility in Kaplice.
As a result, the company achieved revenue of €644.5m, up from €583.6m the previous year. Operating profit was €30.6m, up a small amount from €29.1m.
Starch segment
Revenue in the starch segment was €231.9m in the first three quarter, which is 25 per cent higher than the previous year's comparative level of €186.1m.
This growth was driven by an increase in sales of saccharification products and bioethanol as well as higher market prices. Segment operating profit was €27.9m compared to €22.4m in the first three quarters of 2006/07.
The profit expansion resulted from the volume growth and a higher component of value added.
Outlook
For this financial year, Agrana hopes raw material driven price increases for products in the starch and fruit segments will contrast with revenue reductions in sugar.
The restructuring measures made necessary by the new EU sugar regime will continue in the fourth quarter, making group revenue for the overall year expected to be just under €1,90m, down from the previous year's €1,915.8m.
However, because of the added expenses for bioethanol operations and closure costs for the Hungarian sugar factory and the Czech fruit processing facility, operating profit after exceptional items is expected to ease slightly from the prior year.
