Management report : NORDZUCKER ANNUAL REPORT 2013/2014 49 GR OUP MANAGEMENT REPORT 48 � Group management report 50 � Nordzucker at a glance 54 � Economic environment and market developments 57 � Earnings, net assets and financial position 62 � Employees 62 � Opportunities and risks 68 � Supplementary report 68 � Forecast 50 NORDZUCKER ANNUAL REPORT 2013/2014 : Management report GROUP MANAGEMENT REPORT OF noRDZUCKER AG NORDZUCKER AT A GLANCE Business activities Nordzucker is the second largest sugar producer in the Euro- facturers of food and beverages. The remaining 20 per cent pean Union, with a market share of more than 15 per cent, is supplied to consumers via the retail industry. Nordzucker as measured by its share of the EU sugar quota. In the past sells these retail sugar products in many different varieties, financial year, the company produced 2.5 million tonnes of primarily under the brand names SweetFamily in Germany sugar from sugar beet and refined 200,000 tonnes of sugar and Eastern Europe and Dansukker in Northern Europe. The from raw cane sugar at 13 sites in seven European countries. portfolio includes other products of the sugar-making process, On average over the year the Group had 3,279 employees. especially dried pulp pellets and pressed pulp as animal feed and molasses for the yeast and alcohol industries. Our customers include the confectionery industry as well as producers of dairy and bakery products, jams, ice cream and Sustainability, environmental protection and product safety drinks. Nordzucker sells some 80 per cent of its sugar to manu- have a particularly high priority at Nordzucker. NORDZUCKER AG REGION REGION REGION CENTRAL NORTHERN EASTERN EUROPE EUROPE EUROPE (CE) (NE) (EE) NORDZUCKER AG NORDIC SUGAR A/S POVažSKÝ CUKOR A.S. 100 % 100 % 96.80 % Braunschweig / Germany Copenhagen / Denmark Trenčianska Teplá / Slovakia NORDIC SUGAR AB NORDZUCKER POLSKA S.A. NORDDEUTSCHE 100 % 99.87 % Malmö / Sweden Opalenica / Poland FLÜSSIGZUCKER 70 % GMBH & CO. KG SUOMEN SOKERI OY TEREOS TTD, A.S. Braunschweig / Germany 80 % 35.38 % Kantvik / Finland Dobrovice / Czech Republic SUCROS OY 80 % Säkylä / Finland AB NORDIC SUGAR KÈDAINIAI 70.60 % Kèdainiai / Lithuania NORDZUCKER IRELAND LTD. 100 % Dublin / Ireland Management report : NORDZUCKER ANNUAL REPORT 2013/2014 51 LOCATIONS IN EUROPE GROUP HEADQUARTERS D 1 Braunschweig REGIONAL HEAD OFFICE DK 2 Nordic Sugar, Copenhagen 29 SUGAR PLANTS AND REFINERIES D 3 Clauen 4 Nordstemmen NORTHERN EUROPE 5 Uelzen 6 Klein Wanzleben 7 Schladen DK 8 Nakskov 9 Nykøbing 13 S 10 Arlöv 12 30 11 Örtofta 28 FIN 12 Porkkala 13 Säkylä LT 14 Kèdainiai 26 PL 15 Chełmża 2 11 14 16 Opalenica 24 10 31 23 8 27 SK 17 Trenčianska Teplá 9 D 18 Liquid sugar plant Groß Munzel 5 15 19 Liquid sugar plant 18 1 6 Nordstemmen 3 22 4 7 16 25 19 sugar plants – non-consolidated 20 21 MINORITY STAKE CZ 20 Dobrovice CENTRAL EUROPE 17 21 Ceské Meziříčí OTHER LOCATIONS D 22 Bioethanol plant, Klein Wanzleben S 23 Köpingebro (Fibrex) EASTERN EUROPE DK 24 NP Sweet, Copenhagen B 25 Office Brussels SALES OFFICES LV 26 Riga LT 27 Vilnius EE 28 Tallinn 32 IS 29 Reykjavik NO 30 Oslo IE 31 Dublin GR 32 Athens 52 NORDZUCKER ANNUAL REPORT 2013/2014 : Management report Group structure Eastern Europe The Eastern Europe region includes two sugar plants in Poland, The Nordzucker Group is divided into the three regions of one of which is also used as a sugar refinery, and one in Slovakia. Central, Northern and Eastern Europe. Furthermore, Nordzucker has a 35 per cent stake in Tereos TTD a.s., a sugar producer in the Czech Republic. The Eastern Europe Central Europe sales area also includes a number of other Eastern European In the Central Europe region, Nordzucker AG operates five sugar states. Nordzucker had an average of 523 employees in the plants in Germany. The plants are in Lower Saxony and Saxony- Eastern Europe region in 2013/2014. It accounted for around Anhalt, and produce around one million tonnes of quota sugar 16 per cent of consolidated revenues. every year. Sugar from the Central European region is mainly sold on the German market. Markets outside the EU account for around five per cent of sales. Strategy Other products of the sugar-making process are also sold, such Since the company was founded in 1997, Nordzucker has as animal feed and molasses. focused on growth in its core sugar market. Consolidation of the North German sugar industry was followed by several In addition, Nordzucker produces and markets bioethanol acquisitions in Eastern Europe. Nordzucker pursued its growth from intermediate products of the sugar-making process (raw strategy with the purchase of Nordic Sugar in 2009 and is now juice, thick juice) and molasses at its plant in Klein Wanzle- the second largest sugar producer in Europe. ben. After restructuring its investment portfolio in 2010 and 2011, Nordzucker AG holds a majority stake in Norddeutsche Flüssig- the Group is initially concentrating on its core business: the zucker GmbH & Co. KG (NFZ), which operates two liquid sugar production and distribution of sugar. The Nordzucker Group plants, in Nordstemmen and Groß Munzel. benefits from its strong market position in the EU. Further rein- An average of 1,247 employees worked in the Central Europe forcing this position remains its overriding corporate objec- region in the financial year 2013/2014. Its business accounted tive. In addition, the company reviews growth opportunities for around 44 per cent of Group revenues. outside Europe. The focus is on attractive growth regions such as Africa and Asia, because demand for sugar is grow- Northern Europe ing rapidly there – in contrast to the EU. These reviews are In the Northern Europe region, Copenhagen-based Nordic aimed at preparing the company to move into the produc- Sugar produces sugar in five plants and two refineries in Den- tion of cane sugar and to build a regional sugar marketing mark, Sweden, Finland and Lithuania. The company markets organisation in order to develop an additional high-potential a broad range of sugar products, above all in the Nordic business area. The objective is to sign cooperation agreements countries, the Baltic states and Ireland. Nordic Sugar is the with local, national or international partners. A final decision market leader in Northern Europe and its 1,509 employees on an actual commitment and the associated issues, such as contributed around 40 per cent to Nordzucker’s consolidated the construction of production facilities, for example, had not revenues in 2013/2014. been made at the time the consolidated financial statements and Group management report were prepared, however. NP Sweet is also based in Copenhagen. The joint venture Projects outside Europe not only bring considerable growth between Nordzucker and PureCircle develops and distributes opportunities, but also new challenges. The Executive Board products based on the sweetener stevia (steviol glycosides) is therefore reviewing these opportunities with particular care. in collaboration with its customers. In response to growing demand for natural sweeteners, Nord- zucker also sells products containing stevia, a plant-based sweetener, in addition to sugar. Management report : NORDZUCKER ANNUAL REPORT 2013/2014 53 Sustainable business determines all the workflows throughout Sustainability, a focus on customers and markets, and effi- the company. Long-term success can only be secured by run- ciency gains strengthen the company’s market position and ning a sustainable business and by including environmental enable additional growth in the core business. Nordzucker’s protection, energy efficiency and social aspects in business goal is not just to develop its excellent position within Europe, decisions. Product safety and occupational health and safety but to open up new growth areas outside Europe at the same also have a high priority within the company. Nordzucker sets time. Both are necessary to ensure long-term profitability and itself ambitious targets in all areas of sustainability, which result further growth. in continuous improvements. It is particularly important to include the entire process chain, from the beet to the custo- Company management mer, in the sustainability assessment. The company is managed by an Executive Board made up of Nordzucker’s aim is to offer high-quality products and first-class several members. It reports to the Supervisory Board, which service at a reasonable price. Only by providing consistently has 21 members, of which 14 represent the shareholders high quality can Nordzucker retain the loyalty of its customers and seven the employees. The internal management of the as competition grows even more intense. Nordzucker there- company is carried out by means of financial indicators. The fore sets great store by customer orientation, individual solu- following targets have been set: a return on sales of five per tions, great flexibility and dependability of supplies. Its broad cent, total operating profitability of 15 per cent, a return product range, which includes a wide assortment of speciality on equity of ten per cent and an equity ratio of 30 per cent. products, also adds value for customers. Continuous efficiency improvements along the entire value Shareholder structure of Nordzucker AG chain are driven by wide-ranging projects throughout the Group. Efforts are particularly focused on steps to achieve Following the merger between Nordharzer Zucker Aktiengesell- lasting increases in the yields from beet farming. The aim of schaft and Nordzucker Holding Aktiengesellschaft as of 1 April the 20 · 20 · 20 project is for 20 per cent of beet farmers to 2013, Nordzucker Holding Aktiengesellschaft holds 84.1 per achieve a yield of 20 tonnes of sugar per hectare by 2020, cent of the shares in Nordzucker AG. A further 10.8 per cent is because it is vital to make sugar beet even more competitive held by Union-Zucker Südhannover Gesellschaft mit beschränk- in comparison with other crops, so as to safeguard beet culti- ter Haftung.