CropEnergies, the owner of the UK's Ensus bioethanol site, warned
of a potential fall in the red for the first time in nine years as it cautioned
over the threat to the Europe's biofuels producers from US imports and political
The German-based group unveiled earnings of E12.0m for the
year to the end of February, down 79% year on year, and below market
expectations of an E18.0m result, according to a Reuters poll.
Although revenues rose 13.4% to E780.8m, reflecting the
acquisition of Ensus, one of Europe's biggest grain ethanol plants, the margins
were reduced by higher grain prices.
Indeed, while grain prices were "mainly above E200 a tonne
despite a record harvest", bioethanol values fell over the financial year by a "surprisingly
massive" 30% to E440 per cubic metre, the group's chief operating office,
Marten Keil, said.
Into the red?
And CropEnergies cautioned that operating profits, which in
the year to February dropped 60% to E34.6M, would fall further in the current
financial year, to at best E20m and potentially dropping E30m into the red.
The group has not reported an operating, or overall, loss since
the year to February 2006.
Analysts had expected the group to achieve an operating
profit of E39.9m for the current year.
CropEnergies forecast its revenues rising to E850m-900m,
potentially beating a consensus forecast of E863.9m.
While the group -which proposed cutting its dividend to
E0.10 per share from E0.26 per share last year - stopped short of detailing the
reasoning behind their forecast for weaker profits, the decline comes against
weak dynamics for European groups.
Besides stubbornly elevated grain prices, European groups
complain over "illegal" imports from the US, with traders alleged to be
circumventing anti-dumping duties on US ethanol introduced last year by shipping
to Norway, from where the biofuel is transported to the European Union under a
more favourable trade regime.
And these imports are coming at a time when Europe's own
producers are lifting production, by a forecast 6.3% to 7.1m cubic metres this
year, while demand is being curtailed by a retreat by EU policymakers from
measures to boost consumption of biofuels, and reduce dependence on fossil
CropEnergies described as an "ill-founded u-turn" proposals
to retreat from some biofuels targets, a withdrawal prompted by ideas that crop-based
energy is taking an undue amount of land away from food production.
And it cautioned that, with policy "uncertainty" slowing the
uptake of measures already in place, European countries were "squandering
potential for a quick and cost-efficient reduction of greenhouse gas emissions in
the transport sector and a reduction of [use of] fossil fuels".
On Ensus, which has annual capacity for producing 400,000 cubic
metres of ethanol, CropEnergies said that its "Initial focus" since acquiring the
plant was "on extensive maintenance and repair work", besides investing in new
laboratory equipment and updating the IT infrastructure.
The group aimed "to successively increase the plant's
availability, flexibility and efficiency through a comprehensive investment
Ensus and rival Vivergo plant have capacity for swallowing
more than 2m tonnes of wheat a year, some 15% of typical UK production, although they
have been operating well below maximum levels.
CropEnergies shares stood 1.2% lower at E4.832 in afternoon deals