Analysis of Südzucker 2014

Company: Südzucker

ISIN DE0007297004 | WKN 729700

Business: A German agricultural company. Their main focus is like the name as well as the logo implies sugar (=zucker in German). They are divided into four segments: Sugar (the sugar is refined and sold under the names of Südzucker & Agrana), Special products (Bene which are making functional ingredients for food and Freiberger with frozen pizza and pasta dishes), CropEnergies (the production of bioethanol) and finally Fruit (once again Agrana and Austria juice). Agrana which is to around 49.6% owned by Südzucker and it has previously been analysed please see analysis of Agrana.

Active: Main market is Europe especially with their main business sugar. Via Agrana they are present on all five continents.

P/E: 8.4


Here you can find the previous analysis of Südzucker.

The P/E of Südzucker is excellent with 8.4 and that was a year with poor earnings. The P/B is even better with 0.5 which gives a very clear buy signal from Graham. Already in the last analysis Graham gave a clear buy signal and since then the price has dropped an additional -50%... The earnings to sales are at 4% which I find ok but the ROE is bad with only 6% and a strong drop from the last analysis when it still looked pretty ok. The book to debt is excellent with a ratio of 1.2.
In the last six years they have had a yearly growth rate of 4.7% which is great (from last year there was a drop though in revenue and this year looks even one step worse) and this gives us a motivated P/E of 15 to 18 which means Südzucker is currently undervalued on the market.
They pay a very nice dividend (even after a -55% dividend cut) of 4.3% which correspond to 36% of their earnings and my comment in the last analysis was wrong. They seem to pay out according to earnings which will then mean that there can be another dividend cut for 2014.

Conclusion: Just like last time Graham is very positive towards Südzucker. Back then I was unhappy with the shareholder situation and that has not changed but any company being traded at a P/B of 0.5 makes me interested especially when also the P/E is good and the dividend (at least at the moment). ROE is however an unhappy downside as well as their own statements of a less good 2014.

Due to the nice P/B Südzucker will be added to the Stocks of Interest list with the next update and it is already included in the live feed that you can find the link to on that page.

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