US ethanol producer Green Plains has reported a net loss of $42.8 million (€38.1 million) for the first quarter of 2019, compared with a net loss of $24.1 million for Q1 2018.
Revenues for the quarter were $642.3 million, down from $1 billion the year prior, largely impacted by a weak ethanol margin environment, impacts on logistics from flooding in the US Midwest, and other factors.
“Our first quarter financial performance was impacted by the extremely weak ethanol margin environment, Midwest flooding affecting transportation and logistics, and severe winter weather at our cattle feeding operations,” said Todd Becker, president and CEO. “Albeit still weak, we believe that the worst of the low ethanol margin cycle is behind us, as margins have improved since the end of January. We are also seeing improved cattle margins in the current quarter extending into the second half of 2019 and anticipate achieving $50 to $60 EBITDA per head minimum annualised margins based on forward margins and current hedging strategies.”
“Our financial strength achieved through the first stages of our portfolio optimisation plan has provided the company the ability to return to a normalised operating level, while margins have improved heading into the summer driving season,” Becker added. “All of our plants are operational with the exception of our plant in Madison, Illinois, which should be back online by the end of May. Our goal is to return to producing at our historical rate of 90% or greater of our operating capacity across the platform, which is also beneficial to our partnership long term.”
The company produced 155 million gallons of ethanol during the first quarter of 2019, down from 280.4 million gallons for the same period last year.
Earnings before interest, income taxes, depreciation and amortisation (EBITDA) for Q1 2019 was $18.7 million, down from $23.1 million in Q1 2018.
“Although improving, the current ethanol industry margin environment continues to underperform,” Becker continued. “We remain optimistic that with year-round E15 effective June 1 and the prospect for increased ethanol exports once China trade issues are resolved, this will give us higher ethanol demand needed to reduce the current elevated ethanol inventory levels.
“In addition to our reduced operating cost structure, we believe the advancements in technology around high protein co-products, and the demand for these products worldwide, will also enhance our ability to be profitable in any cycle. We anticipate our first project to become operational in the fourth quarter and we are targeting 2020 for additional projects. We remain confident, based on price discovery, that our earlier expectation of a minimum 12 to 15 cent improvement in EBITDA per gallon margin is achievable at each plant once the technology is operational.”