FRANCE: Quiet war going on inside Tereos

Published: 08/10/2018, 8:43:04 AM

Everything is not sweet in the cooperative group Tereos, according to France's Les Echos newspaper.

In recent weeks, its 12,000 farmers-cooperators, mainly farming sugar beets in the north and east of France, are at the forefront of a governance crisis in their governing bodies. At the end of June, following the non-renewal of two of the 22 members of the Supervisory Board at the general meeting, five other elected members resigned. Nearly a third of the roughly 160 regional councilors - elected on the basis of "one man, one vote" and who choose the members of the supervisory board - did the same.

"What is it about? A banal history of a lost election, " said François Leroux, elected in late 2017 to the presidency of the Supervisory Board, in a statement at the beginning of the month. "Three times and in two instances, the votes were expressed in a completely democratic way and in full conformity with our statutes", he assured, criticizing "an anonymous campaign of destabilization". It also justifies the creation of a single cooperative in place of the previous ten cooperatives.

According to a letter consulted by "Le Figaro", those who resigned criticize the management of the cooperative group, pointing out three "major concerns": debt, the results of diversification, particularly since 2012, and changes in the group's overheads.

If Tereos belongs to the members of the cooperative, the group is managed by Alexis Duval. Appointed General Manager of the company in 2012 at age 35, he is the third generation within or at the head of the company. In a delicate situation: the end of sugar quotas in Europe, since 1 September last year, boosted Tereos volumes but contributed to the fall in sugar prices (-20%) , against a backdrop of beet and sugar cane abundant in emerging countries.

Over the year that ended in March, Tereos saw its net profit fall in the red (-EUR18 million), due to a payment of price supplements of EUR42 million to the farmers. And except for the 2016/17 financial year, the net result for the last four years has remained close to zero or even negative. At EUR2.35 billion, the debt also represents almost four times the gross operating surplus ( Ebitda). The group said in June it will prepare a capital increase.

In its report for the 2017/18 fiscal year, Alexis Duval recalled that "diversification accounts for almost three quarters of our operating results". A diversification carried out for the most part in Brazil and in starch, and that the cooperative group intends to continue "to limit the impact of price volatility".