New restructuring in the French sugar sector. The Tereos cooperative, known for its La Perruche and Béghin Say brands, announced on Wednesday March 8 its decision to shed three factories. Two will be closed, in this case the Escaudoeuvres sugar refinery, in the North, and the Morains distillery, in Val-des-Marais, in the Marne, with respectively 123 and 26 jobs eliminated. The third, the potato starch processing site in Haussimont, also in the Marne, is looking for a buyer.
This strategic decision comes as Tereos, with a 2021-2022 turnover (ended at the end of March) of 5.1 billion euros, is trying to straighten out its accounts. A delicate operation. Its net debt further increased by 22%, over the first nine months of its 2022-2023 fiscal year, to 2.9 billion euros. The group, whose revenues are growing strongly, has warned that over the whole of the year the debt will be higher than that of the previous year. The reason: the sharp rise in the cost of raw materials and energy, which led to an increase in the need for working capital.
Governance crisis
However, it is precisely this heavy debt which had caused an unprecedented crisis of governance at the head of the sugar giant, which federates 12,000 farmers in France. After a long showdown, cooperators led by Gérard Clay had forced the departure, in December 2020, of the historical leaders, criticized for their development policy considered risky.
Since then, Mr. Clay has assumed the role of Chairman of the Supervisory Board of Tereos, but two CEOs have succeeded each other. The third, Jorge Boucas, appointed following the two evictions, who headed the Sodiaal dairy cooperative, will take up his post in April. His roadmap has been drawn. “It will be up to him to complete the recovery of the cooperative group, to deploy the decarbonization plan as soon as possible in the face of the energy issues affecting our industry and to propose new growth directions to the Board of Directors”, said Tereos.
The objective set by the new management was to reduce the debt below the 2 billion euro mark by 2024. Tereos has already sold its starch activity in China, then separated from its subsidiary in Mozambique and of a sugar factory in Romania. The ax now falls on France.
The challenge is to saturate the factories as much as possible to increase the profitability of tools that consume a lot of financial resources. Especially since this heavy industry must decarbonize. However, the Escaudoeuvres sugar refinery required perhaps more investment than others. In April 2020, the rupture of a dike at this factory, which retained beet washing water, led to pollution of the Scheldt. Tereos was ordered in January to pay 9 million euros in damages.
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