CropEnergies posts revenue dip due to UK plant closure

CropEnergies, a Germany-based ethanol producer, said its revenue for the first three quarters of fiscal year 2015/16, decreased by 11% to €558m, compared to the same period last year, due to the temporary closure of its bioethanol plant in Wilton, UK.

However, in a statement, the firm said that its profitability improved significantly due to favourable proceeds for bioethanol.

Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) increased to €89m for the period (1 March 2015 – 30 November 2015), compared to €21m the same period last year, due to increased demand for its bioethanol products.

Net of depreciation, the company had made an operating profit of €63.4m, with a loss of €6.1m the same period last year. The operating margin was 11.4%.

Last year, CropEnergies announced the temporary closure of its bioethanol plant in Wilton, near Redcar after bioethanol prices buckled under the strains of sluggish European markets and the lower oil price.

According to media reports in the Northern Echo, the company confirmed a quarter of its 100-strong team at the facility were leaving after a prolonged pause in production.

CropEnergies told the news website that the closure would continue for an "unspecified time" and said that the firm was "working hard to prepare the site for future use".

2016 outlook
According to the company, in the 2016/17 financial year, business performance will again predominantly depend on price developments on the bioethanol markets.

The forward prices for bioethanol in Europe for the 2016/17 financial year are currently showing a significant decline, though trading liquidity is low and this has been the case for a while, CropEnergies said.

In a statement, it added: "In line with experiences in the 2015/16 financial year, in which some of the spot prices realised were more than 10% higher than the previously quoted forward prices, CropEnergies expects - assuming stable grain prices - an operating profit between €30 and €70m."

Elsewhere, the company said it expected the EU decisions to increase the proportion of renewable energies in the transport sector to lead further market growth in the medium term.

In particular, it said that increasing the blending rates should result in E10, a fuel blend of 10% ethanol and 90% gasoline, being introduced in additional member states.