August 16, 2018 / 5:49 PM / in a month

Sugar giant Tereos expels three members amid strategy row

PARIS, Aug 16 (Reuters) - France’s Tereos, one of the world’s largest sugar makers, has expelled three cooperative members it accuses of damaging its reputation in a row over the group’s push to diversify.

The internal wrangling involves some senior representatives of the 12,000 French sugar beet growers who control Tereos. It comes as Europe’s sugar sector is under pressure from falling world prices after ramping up supply to benefit from last year’s abolition of European Union sugar quotas.

In a statement on Thursday, Tereos said its supervisory board took the unanimous decision to exclude former board members and farmers Gilles Bolle, Gerard Clay and Xavier Laude with immediate effect, following a disciplinary hearing last week.

“This decision is justified by the damage done to the reputation of the cooperative and its members by the circulation, in the media, of deliberately misleading or false information about Tereos’ situation,” the company said.

Contacted by Reuters, Bolle said the sanctioned farmers would mount a legal challenge.

“We are outraged by the decision,” he said by telephone. “We are being expelled for asking what the real financial situation of the group is.”

The row centres on Tereos’ overseas investments in recent years, both in sugar and other areas like starch making.

The group says such activities have contributed to the bulk of its operating profits, while the dissident members argue diversification has been loss-making and has led to Tereos having lower profit margins than European peers.

The row escalated this year when Gerard Clay and another member failed to get elected to the board. This was followed by the resignation of nearly all local Tereos representatives in three regions, and an exchange of arguments by the opposing sides via the press.

Tereos filed legal complaints for defamation.

The group, which last season became the world’s second-largest sugar maker, said in June it was considering opening up its capital to an international partner as it seeks to continue expanding in the face of historically low sugar prices.

For the year to March 31, it reported a 3.5 percent rise in sales to 4.99 billion euros, and a 2 percent fall in adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) to 594 million euros.

It recorded a net loss of 18 million euros, against a 107 million profit in the prior year, with Tereos citing a large redistribution payment to members due to the difficult farming environment. (Reporting by Gus Trompiz; Editing by Elaine Hardcastle)

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