Margin Miracles, Mega-Trends, and Tech Doubts - SAP, Südzucker, Volatus Aerospace

Südzucker: Consolidated Revenue Declines, but Operating EBITDA Rises 40%

In July, Südzucker published its results for the first quarter of fiscal year 2026/27 (March 1 through May 31, 2026). During this period, the sugar and specialty products group reported consolidated revenue of approximately EUR 2.0 billion, a slight decline from EUR 2.1 billion in the same quarter of the previous year. Südzucker shares (WKN: 729700 | ISIN: DE0007297004 | Ticker: SZU) last traded at around EUR 12.70 and are in a moderate upward trend. Over the past month, the stock has gained more than 11%, and since the beginning of the year, it has gained over 38%.

Südzucker, as one of Europe's leading suppliers of sugar, specialty products, starch, fruit ethanol, and bioethanol (CropEnergies), continues to face market pressure. The slight decline in revenue in the first quarter was primarily attributable to the Sugar segment. There, revenue fell from EUR 704 million to EUR 629 million—due to lower sales volumes and falling sugar prices. The CropEnergies and Starch segments also saw moderate revenue declines. Revenue in the Specialties and Fruit segments, however, remained stable.

Despite a decline in consolidated revenue, Südzucker significantly improved its consolidated operating EBITDA. It rose by a good 40% from EUR 96 million in the prior-year period to EUR 135 million.** This encouraging trend is also evident at the segment level. In the Sugar segment, operating EBITDA improved from minus EUR 34 million to minus EUR 21 million due to lower production costs. The CropEnergies segment increased its operating EBITDA from EUR 4 million to EUR 24 million, driven primarily by lower net raw material costs and strong ethanol price trends. Operating EBITDA in the Starch segment also rose from EUR 15 million to EUR 20 million. Only in the Fruit segment did it decline slightly, from EUR 45 million to EUR 44 million.

For the current fiscal year 2026/27 (through the end of February 2027), management has refined its annual targets and now expects consolidated revenue of between EUR 8.1 and 8.5 billion (previously, a range of EUR 8.0 to 8.4 billion had been projected; prior year: EUR 8.35 billion). Consolidated operating EBITDA is expected to range between EUR 480 million and EUR 680 million (previous year: EUR 535 million). At the same time, Südzucker forecasts a significant increase in return on capital employed (ROCE) compared with the weak previous-year figure of 2.7%.

The geopolitical situation and global economic conditions remain sources of uncertainty. In particular, potential further market liberalization through international free trade agreements or duty-free agricultural imports from Ukraine into the EU pose risks to the sugar market.

Volatus Aerospace: Canada's Drone Solution

Rising defense budgets worldwide are driving the drone market to new record levels. Experts anticipate a significant market volume exceeding USD 160 billion by 2034, fueled by the growing need to protect critical infrastructure and civilian applications such as search-and-rescue missions. Volatus Aerospace (WKN: A2JEQU | ISIN: CA92865M1023 | Ticker: ABB) operates in an expanding market. The Canadian systems integrator consistently pursues a dual-use strategy: drone and software solutions developed for civilian purposes seamlessly meet government security requirements. This focus, combined with strategic partnerships, strengthens the company's position in public procurement, particularly in its home market of Canada.

Recent developments demonstrate the dynamic operational implementation of the company's strategy. A key component is the partnership with Singular Aircraft to further develop the FlyOx 1 drone in Canada, which is accelerating Volatus' entry into the lucrative heavy-lift drone segment. Accompanied by a newly opened production facility in Mirabel and the establishment of a local supply chain, this system is intended for use in firefighting, among other applications. The FlyOx 1 has a payload capacity of 1,560 litres and a takeoff weight of approximately 4,000 kg, setting new standards for autonomous aircraft.

At the same time, Volatus is intensifying its collaboration with Kraus Hamdani Aerospace to expand a network-based ecosystem. At the heart of this effort is the long-endurance K1000ULE drone, which is equipped with the robust ATNE++ communications architecture. The goal is to significantly improve firefighting efforts against the frequent wildfires in Canada. Designed for continuous operation even in remote areas, the K1000ULE provides continuous reconnaissance data and ensures reliable communication with the responsible ground station. This clearly sets it apart from conventional drones.

Through these strategic alliances, Volatus is systematically expanding its business model, which is driven by software solutions and services. The importance of the company's proprietary software as a revenue driver has already been demonstrated by the strong margins generated by the SKYDRA platform. The latest financial results for the second quarter of 2026 underscore this growth trajectory. Volatus reported revenue of CAD 8.42 million, representing a 49.5% increase compared to the previous quarter. Equipment shipments rose by 38%, and revenue from services increased by as much as 59% compared to the first quarter. With cash and cash equivalents totaling CAD 59.2 million, the company also has the strongest capital base in its history to finance further investments and production ramp-ups.

Volatus' strategic positioning as a vertically integrated solutions provider aligns with a geopolitical market environment that strongly encourages investment in unmanned systems. In addition to its home market in Canada, international opportunities are increasingly opening up. The company's ongoing qualification for Phase II of the US Drone Dominance Program signals the potential for substantial contracts through US defense programs. At the same time, initiatives such as the Drone Coalition led by the United Kingdom and Latvia, with a budget of EUR 45 million, or the German Bundeswehr's EUR 540 million procurement program, underscore the international momentum in the drone sector, from which Volatus Aerospace could also benefit in the medium to long term.

SAP Falls Despite Higher Price Target: Could AI, of All Things, Be the Stumbling Block?

Two narratives are colliding when it comes to SAP shares (WKN: 716460 | ISIN: DE0007164600 | Ticker: SAP). Operationally, Europe's largest software company is growing strongly, but on the stock market, investors are increasingly doubting whether SAP can translate its strong position into a lucrative AI business quickly enough. On Wednesday, the stock briefly lost 2.93% and fell to EUR 176.82, making it one of the weakest performers on the DAX. By Thursday, this sell-off had already been reversed, and the stock is poised to close the price gap from January 29, 2026, which would be filled at EUR 196.14.

The trigger was an unusual report from UBS. The bank downgraded SAP from "Buy" to "Neutral," but significantly raised its price target from EUR 164 to 201. The message: UBS considers the core business to be robust and sees about 12% upside potential at the current price. Analysts lack the momentum needed for a "Buy" recommendation. The main criticism centers on the slow rollout of so-called AI agents. According to UBS's tally, SAP currently offers only 17 ready-to-use agents; fewer than 20 additional ones are in the ramp-up phase.

Yet the Q2 figures published on July 23 are by no means weak. Revenue rose 9% to EUR 9.88 billion, while cloud revenue surged 22% to EUR 6.28 billion. The current cloud order backlog is significant: it grew 26% on a currency-adjusted basis to EUR 22.93 billion and represents revenue contractually secured for the next 12 months.

Net income rose by 26% to EUR 2.21 billion. Operating cash flow also jumped by 22% to EUR 3.15 billion, while free cash flow increased by 27% to EUR 3.00 billion.

In the first quarter, SAP generated EUR 9.56 billion in revenue and earned EUR 1.95 billion. Due to a EUR 408 million payment related to the Teradata litigation, free cash flow fell by 9% to EUR 3.25 billion. For the first half of the year, revenue totaled EUR 19.43 billion, net income was EUR 4.16 billion, and free cash flow was EUR 6.25 billion. The gross margin remained virtually stable at 73.1%, while the operating margin rose to 27.7%.

In 2025, SAP generated EUR 36.8 billion in revenue, of which EUR 21.02 billion came from the cloud, and EUR 8.24 billion in free cash flow. For 2026, management is targeting EUR 25.8 to 26.2 billion in cloud revenue and approximately EUR 10 billion in free cash flow. The forecast for adjusted operating profit was lowered to EUR 11.8 to 12.2 billion due to the acquisitions of Dremio and Prior Labs.

The conflict thus remains clear: SAP possesses customer data and business processes that are valuable for reliable enterprise AI. However, if the agents are rolled out too slowly, customers could build their own solutions, and the hoped-for additional revenue might fail to materialize. UBS also expects currency-adjusted growth in the cloud order backlog to slow to about 24% by year-end.

Although Südzucker reported a slight decline in revenue, it significantly increased EBITDA by 40% due to lower costs. The drone integrator Volatus Aerospace is reporting significant revenue growth, driven by strategic partnerships and a dual-use strategy. Despite strong growth in the cloud business, analysts' doubts about the slow implementation of the AI strategy are putting pressure on SAP's share price.