Suedzucker AG
XETRA:SZU
Earnings Call Analysis
Q3-2024 Analysis
Suedzucker AG
The group experienced a noteworthy upsurge in revenues, climbing by EUR 673 million to EUR 7.8 billion. This surge was propelled by the Sugar, Special Products, and Fruit segments. Correspondingly, the group’s operating result also soared, marking an increase of EUR 324 million to reach EUR 860 million.
In a decisive strategic move, the company procured an additional stake in CropEnergies, bolstering its holdings to approximately 80%. This was part of a delisting tender offer, allowing CropEnergies shareholders to reinvest in the group and enhancing the allure of the company's shares thereby increasing shareholder value.
The global sugar market's complexity has evolved. Initially, a balanced market was anticipated, but recent forecasts by S&P Global signaled a surplus of 4.4 million tonnes. Nevertheless, uncertainties remain high due to unpredictable adverse effects. The company has already concluded over 90% of its sugar contracts for the upcoming marketing year, mitigating some market risks.
Cash flow figures highlighted a strong position with an increase of EUR 258 million, totalling EUR 917 million. Despite escalated investment in fixed assets reaching EUR 328 million, which was up from the previous year's EUR 268 million, the company managed to improve its net financial debt position, ending November at EUR 1.6 billion, with a healthier equity ratio of 46%.
Facing continual market challenges, the company maintained its group operating result guidance at EUR 900 million to EUR 1 billion. The Sugar segment is expected to contribute notably with earnings between EUR 550 million and EUR 650 million. These projections demonstrate the group’s resilience and the ability to navigate through uncertainties.
Positively adjusting the forecast, net financial debt is projected to be EUR 200 million to EUR 300 million below the previous year's level. Looking ahead, the group aims to achieve an EBITDA of EUR 1.3 billion to EUR 1.4 billion for the fiscal year '23/'24. Through strategic goals and value creation steps like the CropEnergies delisting tender offer, the company is set on securing long-term profitability and value creation for shareholders.
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Good morning, ladies and gentlemen. We welcome all of you to our conference call this morning. The underlying presentation for the call has been published this morning at 7:30 a.m. CET on our website.
Today, we released the statement for the first 9 months of the financial year 2023, '24. We are going to present the highlights of this period and revisit our full year group earnings guidance for business year '23/'24. That has been confirmed today. Following the call, we are going to answer your questions. A recording of this call will be available on our homepage shortly after the call.
Now let me hand over to the CFO, Thomas Kolbl.
Thank you, Nikolai. Ladies and gentlemen, also a warm welcome from my side to all of you and a happy and healthy new year.
As mentioned, I would like to give you a brief overview about the strong business performance in the first 9 months of financial year '23/'24, and details about the confirmed earnings guidance for '23/'24. Furthermore, I will illustrate the main points of our delisting tender offer for all participants of CropEnergies shareholders.
Let me start with the highlights of the first 9 months results on Page 5. First of all, let me underline very clearly that Südzucker has achieved an outstanding performance in the first 9 months of business year '23/'24. Group revenue showed an increase of about EUR 700 million or 10% to EUR 7.8 billion. Group EBITDA was up by more than EUR 300 million to EUR 1.1 billion or 40%, and group operating result more than EUR 300 million to EUR 860 million or 60%. Cash flow increased by 39% and reached EUR 917 million.
Earnings per share after 9 months came in at EUR 2.49 against EUR 1.30 last year. Net financial debt end of November came in EUR 33 million, below prior year's level. And this is a great achievement and confirmation of the guided development during fiscal '23/'24 following comparative improvement since quarter 1 and quarter 2. And that positive development will continue in quarter 4.
Now let's have a look into the segmental performance on Page 6. Group revenues increased significantly by EUR 673 million to EUR 7.8 billion, mainly driven by the Sugar, Special Products and Fruit segments. Group operating result increased by EUR 324 million to EUR 860 million. This increase was mainly driven by the Sugar and Special Products segments.
Now I would like to reiterate the main points about the delisting tender of CropEnergies on Page 8. On 19th of December, we announced an important step for Südzucker Group, the delisting tender offer for CropEnergies shareholders, which we explained in an analyst call on 20th of December. The respective conference call presentation can be found on the transaction page, power plants of [indiscernible]. We are pleased to start implementing a simpler and stronger group structure focused on promising future businesses, in line with our announced strategy. The current corporate and governance structure of the group are not ideal, besides Südzucker, CropEnergies is one of our core businesses and key strategic pillars, especially towards bio-based chemicals and proteins is also listed, which ultimately leads to a complex structure of [indiscernible] entities.
CropEnergies entered the public market in 2006 to help facilitate the expansion of becoming the leading provider of ethanol in Europe. After 17 years of own capital market standing, which served the company well for many years, this setup is no longer appropriate in the current environment and stage of the business development. This volatile commodity-based business, the business model offers limited capital market compatibility and hence the separate listing has been under review for some time, and this has been concluded, is no longer necessary.
As we look forward, now it's the right time to address this legal structure, which no longer benefits either side of shareholders nor the company itself. The announcement reflects careful consideration of the best solution to resolve these issues created by our present structure. As we look to the future, we try to prepare ourselves for the challenges in times ahead of us. We want to simplify the capital structure and the derisk of the decision-making process and businesses of the group.
The intended transaction entails a delisting offer according to Paragraph 39 German Takeover Code to all free float shareholders of CropEnergies. A special conditions of such delisting offer requires Südzucker to compensate CropEnergies shareholders in cash as a result in the subsequent delisting of CropEnergies stocks from the regulated market of German Stock Exchanges.
The delisting offer does come without any conditions pressure down and, therefore, offers maximum deal certainty for Südzucker. Furthermore, the delisting at the end of the offer is not conditional to a certain threshold of shares being tendered into the offer and hence, includes a certain automatism and therefore, addresses all our objectives.
For CropEnergies shareholders, the delisting offer provides an attractive cash grant and the opportunity to tender, sell their shares at a reasonable premium prior to delisting of the shares. If CropEnergies shareholders would like to continue participating in the diversity development of ethanol and bio-based chemicals, they have the opportunity to reinvest their proceeds into Südzucker shares at an attractive valuation compared to the broad offer for CropEnergies shares.
Let's continue on Page 9. For delisting offer, we are required to offer cash compensation to the outstanding CropEnergies shareholders. Minimum compensation is the 8 months volume-weighted average share price prior to the announcement, which amounts to EUR 8.41 per share. This is higher than the unrestricted share price as of 18th December of EUR 6.79 due to the adverse share price performance over the past 13 months. We are convinced to offer a share price of EUR 11.50 per share, which reflects the full valuation of CropEnergies after taking [indiscernible] this offer price we pay at billing and to the current as well as to the longer-term average share price of CropEnergies, which would therefore be attractive to shareholders accepting the offer.
EUR 11.60 percent of premium of 37% to the 6 months lead up would be required to pay, and remaining 69% to the unaffected share price as of 18 December of EUR 6.79 per share. Compensations with cash payment, which will be paid once the offer closes receivable by the end of February 24, and represents the offer price for each CropEnergies share tendered free of charge.
The transaction has a 100% deal certainty as the offer does not contain any conditions precedent nor are regulatory approval require. Once the responsible authority BaFin has approved the offer document, which is submitted 5th of January, the offer period commences. Specifically, the offer will also close independent of the number of shares that will be tendered during the offer. This note as per any delisting offer there will be no additional acceptance still few shares can be tendered. Therefore, the offer period during which shareholders can accept this offer and tender their shares, is the last chance of CropEnergies shareholders to sell their shares at a fair price before the listing as the regulated market will be terminated and a trading of remaining shares will be much more difficult.
The offer also provides an excellent opportunity to those CropEnergies shareholders that would like to continue to participate in the group's development to reinvest the proceeds from the delisting offer in Südzucker share. By reducing the number of listings within the group, we expect that the attractiveness of the Südzucker shares, its liquidity and visibility will ultimately increase with all the benefits for the group and its shareholders.
Let's continue on Page 10. We're confident that the delisting offer is the right step towards a more efficient and more attractive to Südzucker Group and is also reported by our main shareholder, [ SZVG ] probably, who has been a core shareholder of CropEnergies from the day of the IPO. Our offer was also positively received by CropEnergies management and supervisory board. CropEnergies and Südzucker have signed a delisting agreement in which CropEnergies corporate parties committed to apply for delisting at the regulated market and support the offer. The Management Board and the Supervisory Board will publish a recent opinion 2 weeks following the start of the offer period.
With our announcement to launch this delisting offer [ SZVG ] the main shareholder of Südzucker sugar stake of 4.9% has been separately sold to Südzucker at the same price as the offer price. This stock -- step has become affected with the announcement of the delisting agreement which increased our shareholding in CropEnergies from 69.2% to 74.1%. As of today, including the additional purchase share, Südzucker holds already close to 80% of CropEnergies shares.
The support signaled by these key shareholders not only underlines the appropriateness of this decision but also reflects the demand from our investors and the market to simplify the government structure and complexity of our group. We feel that this transaction marks the true starting point to further advance our mutual goals in a much better structure and set up. And we use this positive momentum to continue to broaden our strategy for the benefits of all our shareholders and employees.
As mentioned for further information, please refer to the events, [ Investor Relations ] page also included in the time line and next milestones of the transaction.
In order not to become too extensively today, we will streamline the remaining part of the presentation and concentrate only on selected main points, starting on Page 12 in the sugar market.
First of all, let me revisit with you on the global sugar market. This latest update in December for the last sugar marketing year '22/'23, S&P Global, as one of the leading consultancies have changed its view from formally expecting a balanced market to a small surplus of 1.2 million tonnes. The stock-to-use ratio stays low at 36%. For the current sugar marketing year '23/'24, the forecast from December has changed from a more surplus of 1 million tonnes to new expectation of 4.4 million tonnes surplus. The stock-to-use ratio is expected to increase to 38%, which is still a moderate level in historic terms. Besides the S&P view, it is important to note that many other consultancies will still expect no major surplus for '23/'24. Further important to note is that all consultancies could -- did a further increase in the global demand also in the sugar marketing year '23/'24.
The S&P December forecast of '23/'24 is still at an early stage. There are major uncertainties, particularly with regards to the first development of [indiscernible] the duration of which cannot be precisely forecasted and could well develop additional adverse effects in '22/'24 (sic) [ '23/'24 ]. A certain development in the market is, therefore, not surprising. Further developments must be therefore be monitored closely. Due to the fact that we have already concluded more than 90% of the contract volume for the '23/'24 sugar marketing year at a good price level, there's currently no immediate need for action.
Let's have a look at the European market on Page 13. Despite the difficult story in growing conditions in EU, harvest prospects along the way have improved, but actual harvest conditions are very wet and therefore, rather challenging. Overall, also we would expect to recover production level, you will remain net reported in '23/'24. So to expect to increase campaign days significantly from 107 to about 120 days into '23 sugar campaign, resulting in expected sugar production from beet of 3.8 million tonnes against 3.2 million tonnes in the previous year.
Besides this, let me revisit and update the situation around Ukraine. You have decided to suspend customs duties and quantitative restrictions on sugar imports from Ukraine since June '22 until June '24. As a result, more than 400,000 tonnes were imported in the EU sugar marketing year '22/'23. In the current sugar marketing year '23/'24, Ukraine expects a significant increase in sugar production from the brief average of 1.2 million tonnes to more than 1.6 million tonnes from the '23 campaign. This more than covers the country's own requirements and increases the export potential accordingly.
According to preliminary figures, in the first 3 months of the post-pandemic period, imports into EU are about 10% up against previous year's level. The further development has to be monitored closely. To what extent this will influence EU market has been seen. For example, the further development of already executed export volumes of new sugar producers. Nevertheless, it is also more important to underline again, especially in this market environment, that we succeeded in achieving our original objective of keeping sales prices stable at a high level in the contract negotiation for the sales period from October '23 to September '24.
The continued development in segment Sugar on Page 14. Revenues in the Sugar segment increased significantly. The increase was achieved despite a decline in sales volumes due to the poor climate to harvest, thanks to significantly higher prices. As already communicated, the price level in the '23/'24 sugar marketing year confirms the high level, reaching the '22/'23 sugar marketing year.
Operating result saw some very strong performance. The drastic rise in costs, particularly for raw materials and energy, was offset by higher prices since the end of the last financial year. The further significant increase in production costs with the new 2023 campaign so far only had a minor impact in the third quarter.
Now as said, we will keep the further detailed segmental development for this presentation and ask that you have a look into the respective quarterly statement.
Let's continue with selective points, starting with the P&L on Page 20. The result from restructuring and special items amounted to minus EUR 18 million, primarily due to an impairment of fixed assets at the Food segment Asian production facilities. We had equity result was almost exclusively driven by the Sugar and Starch segment. The financial result came in at minus EUR 95 million, reduced net interest expense of minus EUR 63 million and other financial expense of minus EUR 32 million. The higher interest expense is a result of the year-on-year increase in average debt of around EUR 390 million to around EUR 2 billion. At the same time, average interest rates rose from 1% to around 2.9%. The downturn in the other financial result was mainly due to exchange rate losses from foreign currency loans of non-Europe companies and the complete dispose of a minority interest in the special products segment in the second quarter of '23/'24.
Let's continue on Page 21. Taxes on income came in at EUR 152 million, after EUR 107 million in the same period last year. The reduction of the underlying tax rate is down to 20%. Earnings per share came in at EUR 2.49 against EUR 1.30 in the prior year.
Let me now turn to cash flow, working capital and investment development on Page 23. Cash flow increased in the first 9 months by EUR 258 million to EUR 917 million. The cash flow against revenues ratio improved after 9 months to 11.8% against 9.3% in '22/'23. Cash outflow from the increase in working capital during the first 9 months of '23/'24, EUR 133 million, following a cash outflow of EUR 368 million in the same period of the previous year, was primarily due to the revenues related growth in trade receivables as the increase -- and the increase in sugar inventories as a result of higher raw material and energy costs, was only be partially offset by the increase in liabilities to beat the purpose. Investment in fixed assets reached EUR 328 million against EUR 268 million in the last year. Investments in financial assets and acquisitions were marginal.
Let me now move forward looking at the balance sheet on Page 25. Net financial debt, end of November, was EUR 1.6 billion. As expected, the year-on-year increase in net financial decreased significantly from EUR 594 million at the end of the first quarter to EUR 334 million at the end of the second quarter, now even EUR 33 million ahead of last year's level. The temporary year-on-year increase is mainly due to the higher working capital financing requirements in segment sugar, as I mentioned before. Overall, working capital increased temporarily by 16% or EUR 142 million from about EUR 2.7 billion to EUR 3.1 billion in comparison to last year. Gearing is at 36% against 39% last year. Equity ratio is at 46% against 44% 1 year ago.
Let me now turn to the outlook on Pages 27 to 31. Ladies and gentlemen, also, we are all tired following the numbers, ongoing crisis, it is also our duty as management to point out to stakeholders again and again that this crisis still exists and can have a significant impact on our business. The direct impact of the situation in grain and on the sugar market mentioned before is just one example.
Last time, we have adjusted our group forecast was on 12th of October. At that time, we have raised the group operating result guidance by EUR 50 million to our new range of EUR 900 million to EUR 1 billion. This CropEnergies ethanol prices has lowered its forecast in 2 steps down from a range of EUR 95 million to EUR 145 million to EUR 40 million to EUR 60 million now. This has been a total reduction of EUR 70 million. According to our best knowledge, we are able to keep our group guidance of a range of EUR 900 million to EUR 1 billion. Also, it's more challenging to reach the midpoint of this guidance.
On Page 27, we are going to revisit our current guidance. For fiscal year '23/'24, we expect group revenues to come in between EUR 10 billion and EUR 10.5 billion. For group operating profit, we expect a range of EUR 900 million to EUR 1 billion. In segment Sugar, we expect an earnings range between EUR 550 million and EUR 650 million. Segment Special Products operating result is expected to come in significantly above the pre-year level. Segment from Energy operating results expected to range between EUR 40 million and EUR 60 million. Segment Starch should see a significantly lower operating result. Segment Food earnings are expect to increase significantly.
Let me continue with Page 28. The group EBITDA range is confirmed to come in between EUR 1.3 billion and EUR 1.4 billion. CapEx is now expected to increase to about EUR 500 million, mainly driven by measures to achieve sustainability targets, especially in the sugar, special products and CropEnergies segments, for example, as we did in the FDA framework.
Let me continue with Page 29. A really good news is that despite higher working capital needs, net financial debt is now expected to come in EUR 200 million to EUR 300 million below last year's level, representing EUR 1 to EUR 1.50 per share. We have significantly improved our expectations against our former view of no change against previous year's level. The development is compared on a like-for-like basis and does not take into account the payment made to CropEnergies shareholders as part of the delisting tender offer. The absolute amount of this payment will only be fully determined at the end of February after the end of the offer period.
Let us now come to the end of the presentation, Page 31. Ladies and gentlemen, the percentage figures are strong and clearly underpin that Südzucker Group is back on track, delivery is strong and well-diversified structural cash flows. Last year, we explained that we want to increase the headroom by building earnings and thus freeing up funds to proactively shape into the future. Sooner than expected, we have reached this milestone with an expected EBITDA of EUR 1.3 billion to EUR 1.4 billion in fiscal year '23/'24.
While considering and continuing to keep a clear eye on reducing net debt, we intend to use the opportunities to systematically pursue our strategic goals. This will enable us to safeguard what we have achieved, prepare the company even better for the fluctuations of the future, and thus contribute to a sustainable profitability level and create long-term value. The delisting tender offer for the outstanding CropEnergies shareholders fits perfectly with this objective.
Ladies and gentlemen, thank you all for your attention. We are looking forward to your questions.
[Operator Instructions]
And the first question comes from Alex Sloane from Barclays.
Got a couple on segment Sugar. You talked about the further increases in production costs only being a minor impact so far in Q3. So I was wondering if you could give any color on what we should be expecting Q4 relative to Q3 on this front and in the fiscal year '24/'25 relative to fiscal year '23/'24, maybe as a percentage increase based on what you expect today? And the second one, just on sugar. I think I heard that you said the Ukrainian exports into the EU were running 10% higher year-over-year so far. That doesn't seem massive given the scale of the production increase that you talked about 1.2 million to 1.6 million? So do you think that level picks up the pace? Or where else is that extra sugar production going? And then just finally, can I just check ahead, Thomas, do you say you thought it would be more challenging to reach the midpoint of the guidance given the CropEnergies announcement of [indiscernible]?
Yes, let me start with the Ukrainian one. Yes, it is right. The statistics, the information so far, which are available have shown only an increase of 10% so far in the first 2 months. Clearly, it is the average production volume in the past was 1.2 million, and that was also the number in the campaign '22, if I'm right. And so the forecast for the current '23, the campaign in the Ukraine is 1.6 million. So there is room in max for additional volume of 300,000 tonnes more than in the last year. And assessing the speech, we have to follow that further development very closely how big will the increase against the 400,000 tonnes we have been issued in outing in '22 and '23. Surely, Alex, there are a lot of points which come in play, for example, also to build up the logistics flow and logistic channels, et cetera. So we have to carefully monitor that development. The good point I mentioned in the speech is that we have closed more than 90%, 95% of the forecast in sugar production for the campaign '23 so far.
To say to -- for the first one that is that you asked is that the what I said in speech that we have so far in quarter 3, only a minor impact of the higher production cost of the campaign in 2023. That is right. And this effect will be done fully in the quarter 4 when we then sell only going forward sugar from the new campaign with a higher cost. The forecast, because it's very early comparing, et cetera, it's a difficult campaign, bad weather, et cetera, higher logistic costs. But the best knowledge to date is that we calculate with EUR 100 a tonne higher production costs. We have good sales level, but no further increase, but we could keep the higher sales level. So there is clearly pressure on the gross margin going forward from the fourth quarter onwards. And you said it, you can look on the fourth quarter also on the sugar guidance that profitability will go down, but still is there, and this is a situation that we also foresee for the coming quarters, decreasing sugar profits but still a good profitability to be also very clear. And the last one, Alex, was, yes, we have -- it is really very early also for the, let me say, final production cost, as I said. So there are some uncertainties also in the sugar for the final figures. And we have the 2 top releases of CropEnergies in total EUR 70 million less profitability due to the extreme decrease of ethanol sites. And that's clearly brief pressure on the group guidance, and we stick to that guidance. And this is, as I said, more challenging than it was in -- [indiscernible] H1, clearly.
And the next question comes from the line of Oliver Schwarz from Warburg Research.
Congratulations on the good Q3 results. A couple of questions from my side, please. Adding to Alex's question that you just posted, in regards to the bio-ethanol price. Obviously, that has been depressed for quite a bit now. Can you explain the underlying mechanics that keep the bio-ethanol price under pressure? Is that expected to continue in the short and midterm? Do you see any tendency to -- in regard to the overall situation that could spell changes? That would be my first question.
Oliver, Südzucker's ethanol sales price decreased significantly. We have that clearly not on the radar but also in October, November, where we have been a rebound from that low levels up to EUR 800 close to EUR 900. And over the last 7, 8 weeks, we have seen a dramatic decrease. And yes, let me say, and there are a lot of points in play from our view is that the fundamentals in EU are still intact. The demand is good. It also increased next year due to further blending -- introducing in the, for example, also in Poland. But when we are looking on the global markets on North America as well in Brazil, the prices are also on a low level that has brought some room for imports in the last month. And we believe that these things will come down, and we should think that the possibility that over the next months ethanol prices should recover.
My next question is obviously, on the performance in the Sugar segment. Firstly, you alluded to -- indirectly to the improvement of the overall situation by stating that CropEnergies has cut its guidance a few times. Südzucker saw no need to do so. That's most probably due to a better-than-expected performance in the Sugar and probably also in the Specialty Products segment. Can you flesh out what was better than originally anticipated that helped you to retain your annual guidance? That would be my second question.
Focus then I think the main point that we could keep the guidance was a better profitability in the Specialty Products segment as well as to some extent also in the Food segment.
Yes. I got that just by looking on the numbers, and I fully agree with your assessment. But in comparison to your original anticipations, what drove those improvements that were obviously higher or better than you originally anticipated?
In Special Products was clearly the better margins we reached over the quarters in the year that we fully could cover the higher inflation costs. In the business area, volumes are very good in comparison to that what we assumed in the other quarters. So that are the main drivers. And then also better-than-expected performance of the food preparation business here, especially in Europe, as well as in North America and Middle America, Mexico, we have seen good development.
Okay. So yes, right. And thirdly, I'd like to ask -- we -- you talked about the fine details of the CropEnergies transaction and gave the reasoning for Südzucker acquiring the remaining outstanding shares of CropEnergies, which I fully understand and applaud you as well. However, that is basically addressing 1 of the 2 elephants in the room. I haven't heard the name of the other elephant yet. I didn't saw it in the presentation as well. AGRANA obviously also contributes to the complexity of your group. Obviously, the situation of AGRANA is significantly different from CropEnergies, especially in regards to what stakes you currently hold in that subsidiary. Are there any plans to rectify the situation in AGRANA that are similar or perhaps even different from the CropEnergies situation in the short or midterm?
Really, no, not at that point, clearly. Really, obviously, in contrast to CropEnergies starting [indiscernible] we have other consolation and we hold the majority here together which are our -- still partners. So currently no.
[Operator Instructions] And we have a follow-up question from Oliver Schwarz from Warburg Research.
Yes. In regards to the sugar price, it seems like when looking on your chart on Page 13, thank you for providing that. It seems like the spot price is now on par or even below the EU reporting price, which is mostly driven by contract prices of the European sugar producers. Also, the international sugar price has also taking a hit and is significantly below its peak level that it has in the second half of 2023. The contract price, being on the same level of the spot price, normally tends to spell that the contract price are likely to go down once round of price negotiation is around. And so that basically spells out, at least to me, that if the situation is sustainable as we have it today, that we might see a significant reduction in the contract price come October 2024. On the other hand, you stated that your production costs have gone up by approximately EUR 100 per tonne. Given the uncertainty of the Ukraine situation and also the increasing surplus on the world markets that you alluded to in your presentation, what level of pricing would Südzucker need in the current setup and cost environment to achieve breakeven?
Oliver, thank you for this very complex one. We're really looking in the future. First of all, I think I would like to some points to a bright curves you mentioned. The contract price curve, the world market price curve and the spot price curve. As every year, in the campaign period, the spot price curve is coming under pressure because then sugar is available. That's really the first point. Clearly, this year, we have now seen the dramatic decrease in world market prices that brought also pressure on the spot prices. And maybe coming back to that what Alex asked, this is also this low spot price level in EU that it is not attractive for imports currently to go into the EU, maybe to grow in other destinations. And everything, let me say, to predict these is too early I think on what I mentioned in the speech, there are a lot of consultancies outside. Everybody has another view on the development on the world market. Important is global demand is increasing. It is very early what will happen. And still, also, if things will come in that scenario, which is on the table for Standard & Poor's, we will still stay on a low stock-to-use ratio in historic terms. That has to be clear. And also a world market price level of USD 600, USD 650 is a very high one to be also very clear. And the last one, it's too early to talk about the future, but this is the momentum that we talk about then the increase in production costs for the campaign 2023, and there will be a new game beginning from October '24 onwards, not only price-wise, also cost-wise. So clearly, it's too early to have now a good future, a good view for the development up to September. As I said, lower in sugar, the sugar operating profit, but still on a good level, still high EBITDA, and that is the starting point up to September.
I appreciate it. Two basically housekeeping ones. Can you remind me, the restructuring costs in Q3, the -- I think it was EUR 15 million, if I'm not mistaken. Can you tell me what -- what's -- what created that position basically? Or what...
It was an asset impairment in the segment Food, in the division food preparation on Asian factory assets. It was in China and in Korea due to the bad economic development over the last quarters.
Okay. And lastly, when we are looking at investments in regards to expanding value chain, both at CropEnergies and at Südzucker, can you give us an update? I know from CropEnergies that they had started to -- and you also put that down in your presentation on the assets are part of the business. Can you highlight what's going on in the plans for producing ethylene from bio-ethanol? And also, basically, can you give something that is a bit more concrete on what Südzucker is going to invest in regards to the move into Food -- let's say, proteins from sugar basically value chains in the next 2 years?
Oliver, as also mentioned in the call yesterday, we stick on the Südzucker side to the plants CropEnergies. But clearly, as in every business field, we will monitor. We will adjust that year-by-year. Also, for the business line, CropEnergies has identified. But for the next 15-odd days, no change in [indiscernible], et cetera, in this parameter [indiscernible]
Okay. And from -- from Südzucker's part, any update in regards to that?
No. I think that we will fulfill our long-term plans of CO2 reduction, et cetera, investment also in sugar facilities to lower energy costs, et cetera. No merger and major projects we have to flag here on the call. Maybe a set up -- maybe a -- a new set up then in the analyst call in May.
And we do have another follow-up question from Alex Sloane from Barclays.
Yes. It was actually on segment Starch. Obviously, not a focus of the presentation today, but the guidance is for a significantly lower EBIT year-over-year within the group context. Can you remind us, I mean, obviously, F&L prices are a part of that. But is there any impact there from greater competition of starch imports into the EU from low-cost competition? We have heard that from some peers in other elements of food starch, in particular. Is it -- are you seeing that as well? Or is the guidance more related to the ethanol price?
We have 2 -- let me say, 2 or 3 points. First of all, we have GDP-driven lower starch volumes. We are a specialty starch producer, and we have also -- we have a good -- a big outlet in the construction as well as in the paper industry, and they are facing challenging times. This hurts also our volumes. Second, you mentioned the light in CropEnergies. We predict substantially lower ethanol prices of water form. And then, let me say, the main reasons.
So there are no further questions at this time. So I hand back to Nikolai Baltruschat for closing comments.
Yes. Thank you all for participating today in our call. And as always, for additional questions, don't hesitate to call with us. Thank you, and goodbye.