* Cooperative says study to open up only just started
* Low sugar prices pushed 2017/18 earnings down
* Tereos says record output, hedging limited price hit
* Tereous sees healthy starch, sweetener demand (Adds CEO comments, details throughout)
By Sybille de La Hamaide
PARIS, June 12 (Reuters) - France’s Tereos, faced with historically low world sugar prices, is considering offering a stake to an international partner, as the group seeks to build markets abroad, it said on Tuesday.
The new partner was unlikely to be French or a cooperative, and would not necessarily be another sugar group, Chief Executive Alexis Duval told Reuters before announcing results.
Tereos, which became the world’s second-largest sugar maker last season as it boosted output after the end of European Union quotas last year, is facing a steep fall in sugar prices due to oversupply.
“Today diversification and internationalisation is not an option for groups like ours ... In this context, we are launching a study that could lead us to open the capital of Tereos to non-cooperative external actors,” Duval said.
He said the group had only just started its review and that a change in capital, which could take the shape of an initial public offering (IPO), would not take place this season. He said the group had not contacted any potential partner.
“The sugar market is getting more international structurally,” he said, adding there were a growing number of customers abroad.
Tereos previously listed sugarcane, cereals and starch processing operations on the Sao Paulo Stock Exchange in Brazil in 2010. But this was delisted six years later.
Despite a sharp rise in sugar and starch output, the group’s sales in the year to March 31 rose just 3.5 percent in value to 4.99 billion euros. Adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) fell 2 percent to 594 million euros.
The group limited the impact of lower sugar prices thanks to higher sales and hedging, Duval told reporters.
The group hedged its European sugar exports for 2017/18 at higher average prices than the world market and has covered exports for half of the 2018/2019 season, Duval said. One third of European sugar output for the 2018/19 was also hedged.
The group’s trading branch, Tereos Commodities, opened offices in Vietnam and South Africa last season, bringing the number of sales offices to eight. It marketed nearly 1.4 million tonnes of sugar, up around 40 percent.
Tereos’ sugar output jumped 26 percent in 2017 to 5.3 million tonnes, making it the second largest sugar maker behind Germany’s Suedzucker.
The group, which has 12,000 members, expects the surplus in world sugar production lasting into the next fiscal year. Average world sugar prices fell 27 percent in 2017/18.
“This environment should affect the results forecast for the Sugar Europe division,” the company said.
The international division’s results should prove more resilient than those in Europe, benefiting from performance gains and strong ethanol prices in Brazil, where the group refined a record 20 million tonnes of sugar cane in 2017/18.
The starch and sweeteners division saw an 11 percent rise in sales in 2017/18 and the group said it expected an increase in volumes in 2018/19. (Reporting by Sybille de La Hamaide Editing by Jason Neely and Edmund Blair)