Q2 2023/24: Verbio holds its own in a volatile market environment

Q2 2023/24: Verbio holds its own in a volatile market environment
 

• Solid Q2 2023/24 performance despite expansion costs and difficult market conditions
• Operational excellence: new record levels of production in 1 HY 2023/24 achieved

Leipzig, February 8, 2024 – Verbio continues on its growth path in the first half of 2023/24, with production volumes in the first six months of the financial year exceeding the volumes achieved in the same period in the previous year. In doing so Verbio generated Group revenue of EUR 908.9 million in the 1 HY 2023/24 (1 HY 2022/23: EUR 1,077.7 million). The decrease in revenue compared to the previous year is primarily due to the lower average sales prices of both biodiesel and bioethanol. Verbio’s earnings before interest, taxes and depreciation and amortisation (EBITDA) were EUR 74.9 million (1 HY 2022/23: EUR 170.3 million).

Net financial debt at December 31, 2023 totalled EUR 13.6 million (June 30, 2023: net financial assets of EUR 57.4 million) and the equity ratio was 69.3 percent (June 30, 2023: 70.3 percent).

Biodiesel strengthens Q2 2023/24 Group EBITDA

In the second quarter of the financial year 2023/24 Verbio generated sales revenues of EUR 420.8 million (Q2 2022/23: EUR 485.5 million) and an EBITDA of EUR 26.1 million (Q2 2022/23: EUR 48.9 million) thanks to a positive earnings contribution from the Biodiesel segment. In addition, Verbio was again able to set new production records for bioethanol and increase biomethane volumes. The increased production volumes are due to efficiency improvements in Europe, and to the acquisition of South Bend Ethanol (SBE). This plant in the USA was acquired in May 2023 and is currently in the process of being optimised.

In the Biodiesel segment Verbio generated revenue of EUR 250.1 million in the second quarter (Q2 2022/23: EUR 357.4 million) with an EBITDA of EUR 29.3 million, following EUR 47.0 million in Q2 2022/23. Sales trends in the Biodiesel segment in the financial year 2023/24 to date have been primarily driven by the lower prices of biodiesel in Europe compared to the same quarter in the previous year. The price fall was not only driven by lower raw material costs; instead it as was also a result of imports of allegedly misdeclared biodiesel and HVO from China. In addition to the attractive, but nevertheless overall lower absolute product margin, the low GHG quota prices also had a negative impact on earnings in comparison with Q2 2022/23.

Thanks to higher production volumes it was possible to increase revenues in the Bioethanol/Biomethane segment in the second quarter of 2023/24 (EUR 166.5 million) compared to the same quarter in the previous year (EUR 123.3 million), despite the lower sales prices for ethanol. In addition, Verbio was able to increase the production volume of biomethane to 275.9 GWh in Q2 2023/24, from 261.1 GWh in Q2 2022/23.

The improved product margins thanks to lower grain procurement prices could not fully compensate for the start-up costs of Verbio’s growth projects in the USA and adjustments made to the measurement of inventories resulting from lower GHG quota prices. As a result, Verbio generated an EBITDA of EUR -5.2 million (Q2 2022/23: EUR 1.7 million). As expected, the Group’s plant in Nevada has not yet manufactured significant volumes of bioethanol and biomethane from waste material generated from the production of bioethanol.

Verbio invested EUR 54.2 million in property, plant and equipment in the second quarter of 2023/24 (Q2 2022/23: EUR 52.0 million). The investments made were primarily in the US plants, in the expansion of German plants and of the filling station network in Germany, and, to a lesser extent, in the new production process for manufacturing speciality chemicals from rapeseed oil methyl ester (biodiesel). The ground-breaking ceremony for the speciality chemicals production plant at the Bitterfeld site is expected to take place in the spring of this year.

Positive outlook: Return to fair market conditions expected

For the current financial year 2023/24, Verbio expects an EBITDA in the range of EUR 120 million to EUR 150 million, and net debt in the range of EUR 145 million to EUR 175 million. These forecasts reflect the ongoing pressure on the prices for ethanol and GHG quotas, in particular as a result of the massive volumes of questionable imports of advanced biofuels from Asia in 2023.

Claus Sauter, Chief Executive Officer of Verbio SE, said: “In 2022 and 2023 the oil companies in Germany were able to create a buffer of around 6 million tonnes of CO2 savings using allegedly falsely declared biodiesel from China, corresponding to around 30 percent of the savings target for 2024. This is still putting pressure on GHG quota prices, even though biodiesel imports are falling thanks to European measures and the GHG reduction target was raised in January. It also puts the brakes on recovery in the price of bioethanol. Amid these challenges we are concentrating on the things that we can influence directly. These include the efficient use and continuous optimisation of our facilities and responsible investment in growth projects, while keeping an eye on our capital discipline. Internationalisation and product diversification based on biomass from sustainable sources will give us several mainstays outside the German and European transport sector. In the short term the market distortions represent a burden, but in the long term our strategy will have a positive impact on the company’s success in view of the increasing GHG quota obligations in Germany and the global demand for green molecules.”

Verbio key figures

(EUR millions) 1 HY 22/23 1 HY 23/24 yoy Q2 22/23 Q2 23/24 yoy Production             Biodiesel (tonnes) 303,093 321,844 6% 157,969 160,553 2% Bioethanol (tonnes) 142,683 248,857 74% 71,293 126,165 77% Biomethane (MWh) 522,128 519,132 -1% 261,108 275,945 6% Revenue 1,077.7 908.9 -16% 485.5 420.8 -13% Segment Biodiesel 792.8 572.9 -28% 357.4 250.1 -30% Segment Bioethanol 276.1 328.5 19% 123.3 166.5 35% EBITDA 170.3 74.9 -56% 48.9 26.1 -47% EBITDA margin (percent) 15.8% 8.2% -8pp 10.1% 6.2% -4pp Segment Biodiesel 138.5 74.2 -46% 47.0 29.3 -38% EBITDA margin (percent) 17.5% 13.0% -5pp 13.2% 11.7% -1pp Segment Bioethanol 30.6 -2.2 n.a. 1.7 -5.2 n.a. EBITDA margin (percent) 11.1% n.a. n.a. 1.4% n.a. n.a.

 

(EUR millions) 30.06.2023 31.12.2023 +/- Net debt -57.4 13.6 n.a. Equity ratio (percent) 70.3% 69.3% -1pp

Detailed information on business developments in the first six months of the 2023/24 financial year is provided in Verbio’s half year report for the period ended December 31, 2023, which can be viewed from 8.30 a.m. CET on Verbio’s website at https://www.verbio.de/en/financial-reports/.

 

About Verbio

At Verbio we make more from biomass. In our biorefineries we convert raw materials and residues from regional agriculture into climate-friendly fuels, green energy and renewable products for chemicals and agriculture. In addition, we create high-value components from sustainably-generated biomass for the animal feed and food industries. We employ more than 1,000 people at our locations in Germany, Poland, Hungary, India, the USA and Canada. Our motto “Pioneering green solutions” sums up what drives our international team: with innovative technologies and green solutions, we are shaping the social and industrial transformation toward climate neutrality and ecological production. We contribute to preserving natural resources and to leaving the earth in a habitable state for the generations that will follow us. In doing so we combine global growth with economic success, social responsibility and security of supply. Verbio shares (ISIN DE000A0JL9W6/WKN A0JL9W) have been listed in the prime standard segment of the Frankfurt Stock Exchange since October 2006. Our headquarters are in Zörbig, Germany.

 

Important notice

This publication contains forward-looking statements based on assumptions and estimates by the management of Verbio SE. Although the Company’s management is of the opinion that these assumptions and estimates are realistic, actual future developments and actual future results may differ significantly from these assumptions and estimates due to a variety of factors. For example, these factors can include changes to the overall economic climate, changes to the legal and regulatory framework in Germany and the EU, and changes in the industry. Verbio can give no guarantees and accepts no liability as to whether future developments and the results actually achieved in future will match the assumptions and estimates made in this publication.

 

Contact:
Verbio SE
Ritterstraße 23 (Oelßner's Hof)
04109 Leipzig

Alina Köhler (IR)
Ulrike Kurze (PR)
Phone: +49(0)341/308530-299
Email: ir@verbio.de/pr@verbio.de