VeraSun forecasts $464 million loss
Ethanol producer VeraSun Energy expects to report a Q3 net loss of approximately $464 million (€367.6 million).
The figure is more than four times the number quoted in an earlier announcement that accelerated the company's fall into bankruptcy protection.
The second largest US producer, with about 13% of the nation's ethanol capacity, filed for bankruptcy protection in early November citing volatile corn prices and bad bets on corn futures.
In mid-September, the company had estimated a quarterly loss of $63-103 million. VeraSun earned a profit of $7.8 million in Q3 2007.
The company said it expects to report a Q3 gross loss, net sales less the cost of goods sold, of $206.7 million. VeraSun expects to report a substantial operating loss for the quarter of as much as $637 million, it said in a filing with the U.S. Securities and Exchange Commission.
The company anticipates Q3 revenue of $1.08 billion, up from $221.9 million during the year-ago period, on increased ethanol sales at higher prices.
VeraSun, founded in 2001, went public in June 2006 amid excellent market conditions. Corn was cheap, petrol was expensive and refiners were clamouring for more ethanol to use as a cleaner-burning alternative to the additive MTBE.
Then escalating corn costs began edging into ethanol producers' profits, and many tried to use hedging to control costs. Hedging sets future prices for corn sellers while helping buyers avoid the risk of volatile price swings by letting them lock in at a set cost.
After VeraSun locked into prices for its feedstock for the third quarter, corn went into a sharp decline from almost $8 per bushel to less than $5 per bushel in mid-August.
The company in mid-September tried to raise $20 million in a public offering, but later scrapped that plan and retained Morgan Stanley to help it evaluate strategic alternatives involving anything from a buyout to a partial sale of assets.
The figure is more than four times the number quoted in an earlier announcement that accelerated the company's fall into bankruptcy protection.
The second largest US producer, with about 13% of the nation's ethanol capacity, filed for bankruptcy protection in early November citing volatile corn prices and bad bets on corn futures.
In mid-September, the company had estimated a quarterly loss of $63-103 million. VeraSun earned a profit of $7.8 million in Q3 2007.
The company said it expects to report a Q3 gross loss, net sales less the cost of goods sold, of $206.7 million. VeraSun expects to report a substantial operating loss for the quarter of as much as $637 million, it said in a filing with the U.S. Securities and Exchange Commission.
The company anticipates Q3 revenue of $1.08 billion, up from $221.9 million during the year-ago period, on increased ethanol sales at higher prices.
VeraSun, founded in 2001, went public in June 2006 amid excellent market conditions. Corn was cheap, petrol was expensive and refiners were clamouring for more ethanol to use as a cleaner-burning alternative to the additive MTBE.
Then escalating corn costs began edging into ethanol producers' profits, and many tried to use hedging to control costs. Hedging sets future prices for corn sellers while helping buyers avoid the risk of volatile price swings by letting them lock in at a set cost.
After VeraSun locked into prices for its feedstock for the third quarter, corn went into a sharp decline from almost $8 per bushel to less than $5 per bushel in mid-August.
The company in mid-September tried to raise $20 million in a public offering, but later scrapped that plan and retained Morgan Stanley to help it evaluate strategic alternatives involving anything from a buyout to a partial sale of assets.
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