March 13, 2019 / 4:17 PM / in 11 days

France asks Suedzucker to review factories closure plan

PARIS (Reuters) - The French government asked Suedzucker on Wednesday to review its plans to scale down three sites in France, stating French workers should not have to bear the brunt of a restructure by the German sugar maker after an industry slump.

FILE PHOTO: French farmers demonstrate against the closure of sugar refineries in France at the headquarters of Suedzucker Group in Mannheim, Germany March 12, 2019. REUTERS/Ralph Orlowski/File Photo

A surge in output after the European Union abolished production quotas in 2017 and a 40-percent slump in prices since early 2017 in an oversupplied world market have left many EU companies struggling with plunging profits.

The crisis prompted Suedzucker, the EU’s largest sugar refiner, to announce a plan to cut capacity by 700,000 tonnes and close five sugar production units to save about 100 million euros ($114 million) a year.

In France, Suedzucker will halt sugar output at two of its Saint Louis Sucre unit factories in the northern towns of Cagny and Eppeville. In addition it will cease packaging operations at its Marseille site in southeastern France.

It will also shut two sugar factories in Germany and one in Poland.

Suedzucker’s shares closed 0.2 percent higher on Wednesday. They have fallen 12 percent since the group announced its plan on Jan. 29.

French Agriculture Minister Didier Guillaume and Junior Economy Minister Agnes Pannier-Runacher met with Suedzucker management, including chief executive Wolfgang Heer, in the morning to discuss the restructure.

“The government has asked the Suedzucker Group’s management to consider all options to maintain industrial activity on these sites, and in particular to consider the sale of these sites if credible takeover projects were to emerge,” the ministries said in a joint statement.

“It is not acceptable that France suffers a brutal and uncoordinated solution and bears most of the restructuring envisaged by Suedzucker.”

Suedzucker did not immediately answer a request for comment.

Guillaume had told Sud Radio ahead of the meeting that the sugar sector needed restructuring but said Suedzucker was acting like a “predator” in France.

More than 200 people traveled from France to protest in front of Suedzucker’s headquarters in Mannheim, Germany, on Tuesday against the plan, including more than 150 sugar beet growers.

French growers will be directly hit by the closures as they will have few other outlets for their beets, whose guaranteed price had secured some farmers’ income for decades. The government said more than 2,500 growers would be affected.

Rival Tereos said on Wednesday it had reshuffled its management team and hired a new chief financial officer to adapt to a changing European sugar industry and to prepare a planned capital increase.

Reporting by Sybille de La Hamaide and Sudip Kar-Gupta, additional reporting by Michael Hogan in Hamburg, editing by Gus Trompiz and Alexandra Hudson

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