Verbio's first-half op profit drops sharply

14 August 2007 14:20  [Source: ICIS news]

TORONTO (ICIS news)--Verbio on Tuesday reported a sharp decline in first-half operating profit with the German biofuels maker blaming unfavourable tax legislation, overcapacity and high feedstock costs.

 

Overall earnings before interest and tax (EBIT) were €1.1m ($1.5m) for the first six months of 2007 ended 30 June on revenues of €204m.

 

This was down from EBIT of €16.3m and sales of €241m for the second-half of 2006. The company did not provide comparable data for the first six month of 2006.

 

After tax, Verbio recorded a first-half loss of €3.3m, compared with a profit of €7.3m in the 2006 second-half.

 

First-half EBIT in Verbio’s biodiesel business fell 73% to €3.8m and in bioethanol it had negative EBIT of €5.9m, compared with positive EBIT of €200,000 in the 2006 second-quarter.

 

Verbio said its biodiesel business was impacted by unfavourable tax legislation and overcapacities in the German market. In addition, rapeseed oil prices were high.

 

Verbio’s overall capacity utilisation – for both biodiesel and bioethanol - was 77.2% in the first six months of 2007.

 

The company added it would reduce output at its bioethanol plant in Schwedt beginning next month, due to high grain prices and adverse tax conditions.

 

For the full year, the Leipzig-based company expects no improvement in the negative economic and fiscal conditions in the biofuels sector.

 

“Although there are signals from politicians that the current regulations may be revised in favour of a more flexible taxation for biodiesel, or that the fulfilment of future blending quotas may be brought forward, it is uncertain to what extent and when such changes may occur,” the company said.

 

However, Verbio remained confident in the longer-term growth prospects of the European biofuels market.

 

($1 = €0.73)

By: Stefan Baumgarten
+1 713 525 2653

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