Letter from the Chairman and the Chief Executive Officer

After several years of high sugar prices, the market went sharply into reverse in 2014 and we were unable to match the exceptionally strong results achieved in the past two years. Nevertheless Cosun performed well in 2014. Despite the fall in sugar prices, the group still turned in a good profit and the members’ bonus was high.

Cosun’s other activities will not be able to make up for the expected fall in sugar results but they will underpin the beet price we pay to our growers. Cosun is a financially strong business and can weather a few lean years.

We see the coming years as a transitional period towards a new reality with even larger price swings on the international sugar market. To absorb the impact on our members wherever possible, we are making substantial investments in our profitable activities, including sugar. And we will seize the opportunities presented by the liberalisation of the market.

There are definitely opportunities. In a couple of years, we expect to be processing even more sugar beet into sugar for food and non-food applications. We believe there is a future for beet cultivation in the Netherlands and for Suiker Unie as a major player in the European market. That is why we will continue to invest in the sugar chain. To remain competitive we need a high yield per hectare and efficient sugar factories.

Investing in the future
Our strategy is and will remain geared to further profitable growth in existing and new activities that can extract even more value from our vegetable raw materials. Aviko and Duynie, for example, made a number of smaller acquisitions in 2014 to strengthen their operations.

Performance in many of our markets is determined by the cost price of our products, not only sugar but also fries, inulin, fruit and vegetable puree, animal feed and starch. Everything hinges on efficiency and optimisation. The group improves its performance by optimising its production processes and the energy management programme cuts energy consumption.

These programmes not only reduce our cost price but are also good for the environment. We have invested an average of EUR 110 million in each of the past three years to make our production processes and processing techniques more efficient and effective.

In the sales markets for special sugars, potato specialities, inulin, vegetable colourings and flavourings, added value is key. To generate this added value, our market strategy is geared to working in collaboration with established and potential customers.

Collaboration with customers is even more important in the innovations we develop from vegetable raw materials. We are investing in research and the development of functional ‘green’ chemicals based on renewable, vegetable raw materials for use in a wide range of applications. Cosun Biobased Products focusses on the development of such new products and applications. If the trend towards a biobased economy continues, Cosun can and will play a role in it.

Our mission and our core remain unchanged. The way we achieve our goals adapts to the world around us. We keep what is good and what works, adapt what no longer works and seek continuous innovation. We have been doing this for more than a hundred years, a more robust foundation is unimaginable. We are prepared for the turbulent years ahead. Our members can continue to rely on their cooperative. We have every confidence in the future.

Dirk de Lugt     
Chairman of the Board
Robert Smith
Chief Executive Officer

Breda, 12 March 2015