The European Commission announces quota reduction


The European Commission decided yesterday to introduce a temporary quota
reduction of approximately 2 million tonnes of sugar for the 2007/08 campaign.
This is equivalent to an average of 12% of the total EU sugar quota, taking
into account countries already having sold quotas back to the EU. The quota
reduction is introduced to bring down the massive sugar surplus in Europe,
which is a result of the voluntary quota renunciation under the EU
restructuring fund being far from the expected level. 

Danisco sees the decision of the European Commission as a necessary step to
restore the balance on the market, but Danisco would have liked a permanent
quota reduction, which could have restored the market balance faster. 

The announced temporary quota reduction will have a significant impact on
earnings in the sugar division in the coming financial year, but it will have
no influence on the results of the 2006/07 financial year. 

The restructuring of Danisco's sugar production aimed at adjusting activities
to the new EU sugar regime is progressing according to plan, with three factory
closures completed as planned and the integration of administrative functions
in Denmark and Sweden being well underway. 

Danisco sustains its long-term expectations for future sugar revenue of around
DKK 5.5 billion and an EBIT margin of minimum 10%, once the market balance has
been restored. 

Danisco releases results for Q3 2006/07 on 20 March 2007.

Yours faithfully

Tom Knutzen
CEO

Attachments

03-2007 uk update on the eu sugar reform.pdf