Shares in CropEnergies soared 7%, returning close to record
highs, after the group raised its profits hopes, citing the boost from the
restarting of the Ensus plant at a time of higher-than-expected ethanol prices.
CropEnergies shares touched $10.64 in early deals in
Frankfurt before easing back to $10.40 in afternoon trading, a gain of 5.2% on
The gains followed the group's upgrade to E50m-90m, from E40m-80m,
in is forecast for operating profits for the year to the end of February 2018.
The guidance on revenues was lifted to E900m-850m, from E800m-875m.
The upgrades reflected "strong" preliminary results from the
March-to-May period, the first quarter of the financial year, which showed operating
profits up 21% at E23.5m, on revenues up 38% at E231m.
CropEnergies said that the result reflected in part firmness
in energy markets, saying that "the realised ethanol prices were above the
originally expected forward prices for the first quarter".
However, the "main reason for the improved operating profit
was the high utilisation of all production facilities".
Signally, the group has reopened its Ensus ethanol plant in northern
England, which has capacity for using more than 1m tonnes of wheat a year, and
which is said at last to have been realising some of the financial potential
outlined by the consortium which started work on the site in 2007.
A consortium of banks, including RBS, put up £150m to build
the plant, with US private equity firms Carlyle and Riverstone investing a
However, the poor performance of Ensus, amid high grain
prices and a retreat on biofuels, prompted the group to sell out to
CropEnergies in 2013 for £11.6m.
'Ensus came right'
"Ensus came right" in the quarter, a person familiar with
the situation told Agrimoney.com.
"Ethanol prices were up, the price of wheat came down.
Ethanol production really did calculate," the trader said, flagging talk of gross
margin of £10,000 a day and more.
Profitability has been helped by the ability of the site to
switch raw material, using corn as well as feed wheat.
Furthermore, it has benefited from the UK's strong imports
of both grains, which have helped keep a lid on UK wheat prices, after a strong
finish to 2016 when a weaker harvest and decent start to the season for exports
looked like making for tight supplies.
UK wheat imports for April, the latest month for which data
are available, hit 209,000 tonnes, the highest since August 2014, while corn
imports came in at 254,000 tonnes, the highest since March 2014.