Verbio's 9 month earnings down 5% in FY2017/2018

9 May 2018 |

Germany-based biofuels producer Verbio has reported a 5% drop in earnings during the first nine months of financial year 2017/18 as the company experienced a faster-than-expected fall in margins despite high utilization rates at its plants.

The Leipzig-headquartered company, which is one of Europe's biggest producers of biofuels, said group revenues fell 5% to €513.2 million compared with the same period in 2016.

"The primary driver of the adjustments made to forecasts is the continued imports of subsidised biodiesel from Argentina and Indonesia, which have led to a heavier than anticipated decline in prices in the third quarter of 2017/18," the company said in a statement.

Argentina is estimated to have exported around 800,000 mt of soybean-based biodiesel to the EU since the bloc cut anti-dumping duties after a ruling by the World Trade Organisation (WTO).

Indonesia is likely to export around 425,000mt of palm oil-based biodiesel before the end of this year.

Earlier this year, Verbio said low export taxes and other government incentives had enabled Argentinian and Indonesian companies to sell biodiesel in Europe at $50-60/mt cheaper than EU biodiesel producers can buy raw materials such as rapeseed oil.

In today's earnings release, Verbio said a sustained period of low prices for bioethanol had also eroded profits during the reporting period.

"As a change in the situation cannot be expected in the short term, the Management Board expects that the pressure on prices for biodiesel and bioethanol will continue in the fourth quarter of 2017/18," the company said in its statement.

Verbio's output of biodiesel and bioethanol was reported at 544,949 mt during the nine-month period, compared with 539,801 mt in the same period in the previous year.

In the first nine months of the financial year 2017/18 Verbio said it produced 464.4 gigawatt hours of biomethane, an increase of 11% compared with the same period in the previous year.

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