Letter to the Shareholders Nordzucker AG - 5/2014 - October 2014

Letter to the shareholders Current information for the shareholders of Nordzucker AG, Nordzucker Holding AG and the partners of Union-Zucker SĂźdhannover GmbH Issue 05 | 21 October 2014

Dear shareholders, The current market situation is putting us under significant pressure. Over the past few months, sugar prices have once again fallen considerably. The global market is having an increasing influence on the market in Europe, which has meant greater volatility and falling prices in the EU. Also impacting on prices are fiercer competition for market shares and large sugar surpluses on the EU market due to good harvests and higher imports. This price pressure on the market is having a noticeable effect on our results and will continue to do so over the coming year.

Business performance We closed the first six months of the financial year 2014/2015 with a significant fall in revenues and earnings. Compared with the first six months of the previous year, revenues fell by around 20 per cent to EUR 975 million. Net income for the period fell from EUR 185 million to EUR 53 million.

The fall in revenues was mainly due to lower prices for quota and non-quota sugar, but also partly because of declining sales volumes in sugar and animal feed. Bioethanol revenues also decreased. The fall in revenues had a marked impact on earnings.

A lower balance sheet total increased the equity ratio from 66.8 per cent to 68.0 per cent. Cash and cash equivalents exceeded financial liabilities by EUR 205.3 million, demonstrating that Nordzucker remains on a firm footing.

Outlook We believe that prices are bottoming out at their current levels in the EU, which will see buying interest pick up. However, the price trend in the financial year 2014/2015, but also – and especially – in the financial year 2015/2016 will bring its full impact to bear on the result. The expiration of the current sugar market regime in 2017 is already casting its shadow and confronting us with a new market and sales envi-

Nordzucker AG l P.O. Box 49 21 l D-38039 Braunschweig l Phone +49 531 2411-0 l ir@nordzucker.de l www.nordzucker.de

ronment today. Within this context, competition for market shares in the EU sugar market has significantly intensified. Revenues and earnings will continue to fall in 2015/2016 as well. Nevertheless, we are expecting the global and European sugar markets to recover again in the medium term. We believe that supply will be decreased in some countries on the back of the low prices. As demand continues to rise, this will eventually lead to an increase in prices once more.

We have reached some key milestones over the past few months and years in our bid to ensure that Nordzucker remains fit for the future, completing our Profitability plus efficiency programme and rea­ ligning our organisational structures and business processes. However, we are fighting a constant battle to become more competitive and meet the challenges of the market. At the same time, we are adhering to our strategy of examining growth opportunities outside Europe and maintaining a substantial level of capital expenditure in our European core business. A solid financial policy over the last few years has enabled us to create the necessary leeway for forward-looking capital expenditure. We are a company with a firm foundation and we will reposition ourselves in light of the changes in the market. Day by day, we are working to achieve this across all areas.

2014 campaign launched – record harvest expected This year’s sugar beet campaign in the Nordzucker Group was launched on 10 September 2014. According to the forecast, the harvest looks set to be record-breaking overall. Almost right across the Group, early sowing and good growth conditions aided beet development. Only in a handful of growing areas in Poland were conditions not ideal. Due to the large harvest, we are anticipating a longer beet processing period than usual of around 130 days. Our plants are well prepared to handle large volumes of beet and a long campaign and have so far had no problems processing this year’s beet volumes.

Nordzucker AG The Executive Board

You can find the current interim report for the financial year 2014/2015 in our Download Center under ‘Shareholders’ at www.nordzucker.de.

Nordzucker AG l P.O. Box 49 21 l D-38039 Braunschweig l Phone +49 531 2411-0 l ir@nordzucker.de l www.nordzucker.de