Royal Cosun on track with improved results in dynamic 2023

Hans Meeuwis, CEO Royal Cosun

“2023 was a dynamic year in more ways than one. Extreme weather conditions, ongoing political and economic uncertainty, and significant cost increases throughout the chain had a substantial impact on Cosun and its members. Nevertheless, good progress on our strategic priorities and further improvement in results were made. This was crucial for a good beet price and a profitable model for our members in an extremely challenging crop year. The growers and employees deserve big praise for this. A healthy performance also enables us to accelerate our ambitions. We are optimistic about the developments heading into 2024, but the dynamics of 2023 will also bring challenges in the coming year. We will therefore maintain our strategic course and focus on further acceleration, choices, and improvement of our underlying results. This is how we will continue to build a plant-based future and future-proof business. With promising prospects for everyone in this wonderful sector.” 

Arwin Bos, Chairman of the Board of Royal Cosun

“In a year in which we had to deal with exceptional weather conditions, our cooperative and growers have demonstrated that with resilience, ingenuity, and hard work you can still achieve a good result. Despite significant challenges in the field, we managed to harvest and process more than 99% of the beets. The continued improvement in the beet price is essential for securing the profitability of our members and enables them to offset cost increases in the field. We can be proud of our cooperative’s members and employees and of what we have accomplished together over the past year.”  

Preliminary results 2023

Cosun’s consolidated turnover increased from €3,047 million to €3,704 million in 2023. The 22% increase was driven by a positive price trend, while the volume trend was mixed. However, recession and inflation did affect the demand trend, particularly in the higher ingredient segment. Operating income (before members’ bonus) increased from €196 million to €525 million in 2023. This increase was partly driven by the structural improvement in results through implementation of the strategy Unlock 25 and partly by favourable market conditions and necessary price increases to offset increased costs. Divestments and the discontinuation of innovation in biobased resulted in an incidental negative result of €-/-39 million in 2023. 

Table 1. Summary of 2023 preliminary results compared to 2022   

The greatly improved result, the high sugar price and good forecasts resulted in a beet price at standard quality of €78.00 (2022: €68.75) per ton and a total members’ bonus of €267 million. The average yield per hectare is €5,891 (2022: €5,483). For Cosun, this means a net result of €159 million (2022: €76 million) after members’ bonus.  

Strategy Unlock 25

Cosun’s mission is to unlock the full potential of plants and co-products in a transparent and circular way and turn them into valuable, plant-based solutions. In doing so, Cosun is responding to societal challenges such as the growing demand for food and food ingredients, plant-based alternatives to fossil raw materials, health-promoting ingredients and the protein transition. Cosun’s strategy focuses on the structural improvement of results in the short and medium term, profitable growth in four core areas (sugar beet, potatoes, co-products and green & health-promoting ingredients), and the development of a future-proof, sustainable chain. In this way, Cosun is working on a future-proof earnings model for its members and other stakeholders, aiming to have the most positive impact on society and the environment.

Strategy progression in 2023

In 2023, the priority was to further improve underlying results. Despite normalisation of energy prices, mitigating inflation, and rising costs remained a priority. Most of the business units within Cosun successfully contributed to this. Higher costs were successfully passed on to the market, with margins continuing to improve. Operational efficiency initiatives across the group also helped to mitigate costs and further improve results. 

In line with the strategy, strict choices were made concerning the portfolio and the necessary investments were made for further growth. This led to three business parts being sold in 2023: fruit and vegetable processor SVZ, the potato factory Aviko Cuijk and Aviko Norden. With these divestments and through new investments, more focus will be placed on accelerating growth in Cosun’s key areas of focus. Investments in potato production in China and Poland, among others, anticipated Aviko’s growing demand for potato products in Europe and Asia in 2023. A promising development is the investment in a demonstration plant in Nijmegen and the construction of a separation unit, in cooperation with Heineken, to split brewer’s spent grain into plant-based proteins and fibres.

The innovation portfolio was further refined in 2023. The long-term investment in Cosun Protein is developing positively. Investments and collaboration with partners and start-ups are helping with the necessary further acceleration of product innovations within Cosun. Further development and construction of the plant for biobased Betafib ETD was unfortunately halted due to limited economic feasibility. 

In terms of sustainability, considerable strides were made throughout the organisation in 2023. The aim is to help our growers within the cooperative to make their crops more sustainable. The ‘Groeikracht Cosun’ programme – set up for this purpose – initiated inspiration farms in 2023, where growers can learn from each other about sustainable growing methods, energy savings, and biodiversity measures. Another important focus is helping our growers to further improve water quality in their plots. An extensive programme has been set up for this purpose within which we are working to raise awareness and share knowledge to reduce nitrate leaching in crops for Cosun. Also, starting this year, we are offering our growers free sampling of plots to map the situation regarding nitrate leaching at farm level. This helps growers reduce nitrate leaching into ground and surface water at their own farms. Next year, about 1,000 plots will have already been sampled for this purpose. Within the Cosun-wide SCO2RE+ programme, business groups worked on energy savings and electrification of operations, partly using new technologies. In 2023, the electricity purchased for all Cosun locations in Europe was 100% green.

The organisation was further strengthened to facilitate its profitable growth ambitions. In addition, an improvement in employee engagement was achieved by 2023, and diversity of the leadership team continued to increase. Safety remains a top priority and an absolute focus towards 2024. 

Outlook

In 2024, Cosun will celebrate its 125th anniversary. It will be a year in which we, together with members, colleagues and partners, will look back with pride and also look forward to the future with confidence, for current and future generations. In that context, we are also maintaining the strategic course set out in Unlock 25. Increasing political and economic uncertainty, climate challenges, stricter laws and regulations, and cost increases throughout the chain will continue to play a role in the coming year. Cosun is therefore fully committed to further accelerating its plans, building a plant-based future, and securing a future-proof earnings model for growers. A decisive, stable cabinet is important in this respect, and collaboration on clear long-term policies is essential. This will make it easier to be successful together, both now and in the future.  

Explanation of result for core areas 2023 

Sugar beet

Cosun Beet Company achieved a good result despite the turbulent year on the economic and political front. A high world market price for sugar, low stocks within Europe and higher beet costs within the sector, also due to higher prices of competing crops and sharply increased costs of cultivation, have contributed to historically high price levels within Europe. Energy prices normalised somewhat last year, but are still at higher levels than before the war in Ukraine. All this has favourably affected the sugar market for Cosun Beet Company. Utilising co-products to generate renewable energy in the form of green gas led to a total production of 23 million m3 of green gas in the Netherlands in 2023. This means that Cosun Beet Company continues to be one of the largest producers of green energy in the Netherlands.

Potatoes

Aviko’s results made a full recovery in 2023 after several difficult corona years, the outbreak of war in Ukraine and the subsequent energy crisis and resource scarcity. The improvement in results was seen in all of Aviko’s business units, with the Chinese operations in particular making a substantial contribution. Sales in frozen potato products developed positively, partly due to earlier capacity investments. In 2023, two parts of Aviko’s business were sold: the entity in Cuijk, which produces steamed and pre-cooked potatoes, and Aviko Norden in Sweden, which produces fresh potato and root crop products. The focus on growth areas in Europe and Asia continued. Further investments in new production lines were made in Poland and China. At the Venray plant, the expansion of flake production capacity was completed.  

Green and health-promoting ingredients

Sensus experienced a difficult year with lower inulin sales and poor harvest conditions for chicory. We have faced lower sales due to inflation and recession. Inventory reduction in the chain in our sales market in the United States also played a role. Although the per-hectare inulin yield is higher than last year, about 70 hectares were not harvested due to persistent rainfall. In the longer term, the outlook for Sensus is positive. Expectations for the inulin market are positive due to trends such as sugar reduction, gut health (microbiome), and immunity.  

Cosun Protein put the plant-based fava protein isolate Tendra® into production in 2023, following its market launch in 2022. Sales are developing positively. This makes fava a good basis for a future broadening of Cosun’s protein portfolio. Partly to this end, investments were also made in the scale-up revyve, which produces protein from brewer’s yeast. Further accelerating growth in plant-based protein remains a priority, with a focus on autonomous growth, M&A, and partnerships. 

Cosun Biobased Experts discontinued the development of Betafib ETD due to limited economic feasibility. The strategy for Cosun Biobased will be reassessed in the first half of 2024.  

Co-products

Geopolitical and economic instability worldwide affected raw material availability and prices in 2023. As a result, prices for co-products remained high. Consequently, Duynie Group achieved a good result in 2023, with all Duynie’s divisions contributing positively. Based on its growth strategy, Duynie Feed started businesses in Spain, Croatia, Serbia, Bulgaria, and Greece last year, which also increased sales. Significant strides have been made in innovation, including in the field of brewer’s spent grain protein. Construction of a separation unit at Heineken’s Mons-en-Baroeul plant in France commenced in 2023 and is expected to start up in 2025. To prepare the market for this new food-grade nutritional protein, a demo plant has been built in Nijmegen, where protein can be produced from early 2024.  

Beet price 2023: continued increase in a challenging crop year

The 2023 base price is set at €35.00 per ton of beet. The members’ bonus increased to € 43.00 per ton of beet (2022: €36.25). For standard quality member’s beets delivered (sugar content of 17% and 91 extractability), the beet price per ton was €78.00 (base price of €35.00 + €43.00 members’ bonus). In 2022, this standard beet price was €68.75 (base price of €32.50 + €36.25 members’ bonus). 

The price of beets of average quality delivered over 2023 was €67.09, compared to €65.18 in 2022. This slight increase was mainly driven by the higher base price and members’ bonus, and was cushioned by a content adjustment of -/- €9.91 (-/- €3.09 in 2022). The growing season was marked by weather extremes. The cold and wet spring led to a late sowing date. The delay was made up somewhat towards the growth point date. Spring had a long period of drought, followed by heavy precipitation in mid-July. Extreme rainfall during the season and frost starting in late November resulted in a long processing period and plots that could not be harvested.   

Average sugar content in 2023 was 15.6% (2022: 16.5%) and extractability was also slightly lower at 89.9 (2022: 90.4). The price for surplus beet at standard quality was set at €35.00 per ton (2022: €30.00). At average quality delivered, this amounted to €30.11 (2021: €28.44) per ton. In the 2023 season, a yield expectation of 13.5 tons of sugar per hectare was achieved in the Netherlands  

(2022: 14.5 tons). The average financial return per hectare for the grower in 2023 amounted to €5,891 (2022: €5,483). 

Table 2. Estimated Dutch beet harvest and beet sugar production for 2023 and 2022

The figures in this press release have not been audited by the external auditor and do not constitute a disclosure as referred to in Section 2:395(2) of the Dutch Civil Code. In April, Cosun will publish the definitive figures for 2023 on its website www.cosun.com.