| |
| Südzucker share |
 |
 |
Performance |
|
|
| |
| Capital market
environment |
| |
| Driven by rising earnings forecasts from German
companies as a result of strong economic growth, the DAX and
MDAX, after a weak March 2007, started to soar and reached record
highs in July 2007. However, the beginning of the market crisis
related to US subprime mortgages and the associated weakness
in the US real estate market triggered stock market corrections
in both the United States and Europe. The US mortgage crisis
expanded to become a worldwide credit crisis in the second half
of 2007, with international banks being forced to write down
their loans portfolios, in some cases substantially. The US
Fed and the European Central Bank (ECB) attempted to mitigate
the credit tightening by injecting liquidity and lowering prime
lending rates. The credit tightening and the concerns about
reduced consumer spending in the United States stoked anxieties
about a worldwide recession, which led to ongoing uncertainty
in the global capital markets. German stock markets were very
volatile and in the second half of 2007, the DAX moved sideways
while the MDAX dropped. In early 2008, amid speculation and
execution of stop loss orders, share prices plummeted in market
crash fashion. By the end of February 2008, the DAX and MDAX
had recovered somewhat. During Südzucker's fiscal year
2007/08, the DAX rose 0.5 % while the MDAX lost 6.2 %. The indices
closed at 6,748.13 and 9,093.54 respectively on February 29,
2008. |
| |
|
| Südzucker's
share price performance |
| |
The performance of our share price in fiscal
2007/08 was conflicted by the strains of European sugar market
reforms, improvements in these reforms announced by the EU
commission in October 2007 and the recession fears of international
financial markets triggered by the US mortgage crisis. From
a high of € 15.97 per share on February 28, 2007 (closing
value for the 2006/07 financial year), Südzucker's share
price significantly underperformed the market as a result
of an announcement regarding a goodwill adjustment, and in
March 2007 traded below € 14.
Südzucker's stock subsequently rose significantly and
reached a high for the year of € 16.66 on July 12, 2007.
A second price correction started at the end of July as a
result of the emerging US mortgage crisis. The positive decision
on implementing the so-called "reform of the reform"
of the sugar market regulations at the beginning of October
spurred our share price to a high of € 16.08 at the beginning
of January 2008. Our share price was unable to avoid the turbulence
generated by the subprime crisis on January 10, 2008 on European,
Asian and US stock markets, and the price dropped in an increasingly
volatile environment, although less severely than the DAX
and MDAX. Südzucker's shares recovered from a low of
€ 13.41 on January 23, 2008 and at the end of the business
year, February 29, 2008, closed at € 14.50 on the XETRA
exchange.
The concurrence of the described macroeconomic and sector-specific
factors resulted in a higher absolute volatility in Südzucker's
share price relative to the prior year. However, relative
to the MDAX, the share price performance maintained its long-established
historic stability (beta factor 0.71, prior year 0.78).
In the fourth quarter, Südzucker's share price closed
the previous underperformance gap compared to the MDAX, and
when evaluated over the entire reporting period, performed
in line with this index. Including the dividend payment of
€ 0.55 per share for the 2006/07 fiscal year, Südzucker
shares declined by 5.8 % in fiscal 2007/08. In comparison,
the MDAX lost 6.2 % over the same time frame. |
| |
|
| Long-term shareholder
value |
| |
| As always, long-term investors were able to
benefit from Südzucker AG's sustainable strategy and the
relatively stable value growth of the shares, despite the latest
turbulence in the financial markets. An investor acquiring 1,589
Südzucker shares on March 1, 1988 (beginning of the financial
year after the merger with Südzuckerfabrik Franken) at
a price equivalent to € 6.29 per share or € 10,000,
who re-invested the cash dividends (excluding tax credits) in
new shares and participated in capital increases without supplemental
cash investments, would have had assets of € 67,909¹ on
February 29, 2008, a gain of 579 %. A securities account holding
Südzucker shares thereby returned on average 10.0 % annually,
just below the comparable MDAX return of 11.3 %. The long-term
value growth compared to the DAX (average return of 9.6 % per
annum) is somewhat better, with comparably lower volatility.
|
| |
 |
1) Based on: Spot price, floor of Frankfurt Stock Exchange |
|
|
