Südzucker - Q3 results: challenged numbers, improving narrative

Davy Research
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As expected, Südzucker (SZU) has delivered a challenged Q3 performance, with the severity and acceleration of losses in Sugar prompting an operating loss at the group level. While SZU is in the eye of the post-sugar market liberalisation storm, there appear to be no new negatives against an improving pricing backdrop for processors. While SZU will not materially benefit from the recovery in European spot prices until H2 FY2020, assuming such recovery is sustained, the equity may likely decouple from operating metrics over the coming quarters. We do not envisage any material changes to our forecasts. An undemanding price-to-book should underpin valuation.