Südzucker - Q1 results highlight weak sugar and bioethanol pricing environment

Davy Research
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As expected, Sudzucker (SZU) has delivered a weak Q1 performance, reflective of the headwinds facing the European sugar market. While Sugar and CropEnergies suffered from pricing pressures, Special Products and Fruit proved more stable, offering some counter-narrative to the negative Sugar backdrop. With SZU guiding for material Sugar losses in FY 2019, the valuation barometer has shifted to gauging the magnitude and timing of European sugar market recovery – a period which SZU believes will take “at least two years”. With the equity soft into results, the reiteration of guidance should offer near-term support.