European producer CropEnergies reports reduced ethanol production
CropEnergies AG, a leading biorefinery company, reported a decline in both ethanol production and earnings. The decrease was mainly due to maintenance shutdowns and normalized ethanol prices. CropEnergies AG operates four biorefineries in different countries, including Germany, Belgium, France, and the U.K. These plants have a combined ethanol production capacity of 1.3 million cubic meters per year. Additionally, the biorefineries can produce 1 million metric tons of food and animal feed annually and 415,000 metric tons of liquefied carbon dioxide.
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During the first quarter of the 2023-2024 fiscal year, CropEnergies production of ethanol faced a decline, producing only 221,000 cubic meters, as compared to the same period in the previous fiscal year, where they produced 281,000 cubic meters. This indicates a challenging period for the company, with various factors impacting their production and sales. As a result, the company's earnings before interests, taxes, depreciation, and amortization (EBITDA) experienced a significant drop of 74 percent in the period from March to May, as compared to last year.
The company's shares also took a hit, falling by 6 percent during early trading. CropEnergies' revenues for the quarter were recorded at EUR 321 million, showing a decline from EUR 399 million, while their operating profit stood at EUR 14 million, down from EUR 87 million. The latest data from Refinitiv reveals that the cost of ethanol has decreased by 39 percent in comparison to the previous year.
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The company has experienced a decrease in revenues and results, which has been attributed to lower production volumes due to maintenance shutdowns and the reduced prices of ethanol sales. CropEnergies has explained that ethanol prices were substantially higher during the same period last year, but they have since normalized. Additionally, the company has acknowledged that early price hedging for raw materials has played a significant role in the strong results achieved during the first quarter of 2022-'23.
According to Procurement Resource, CropEnergies experienced lower ethanol production, revenue, and operating profit compared to the previous year due to maintenance shutdowns and normalized ethanol prices. As a result, ethanol prices are expected to remain volatile and below last year's levels.
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