Abengoa net profit up 20% as biofuel issues loom

27 February 2008 14:44  [Source: ICIS news]

LONDON (ICIS news)--Abengoa has posted a 20% jump in 2007 net profits but warned that the global credit crunch could complicate financing for future projects, Europe’s largest bioethanol producer said on Wednesday.

The Spanish company’s bioenergy division delivered a 29% sales jump to €613.7m ($916m) last year.

Net attributable profits for the group, which has other industrial and engineering arms, rose 20% to €120.4m, while sales also increased 20% to €3.2bn.

In a statement, Abengoa said profit margins were pressured last year but would not provide specifics and was not available for further comment.

Madrid broker Ibersecurities said margins rose to 13% compared with 10.5% in 2006, a slower rate than expected.

“The markets are difficult, both for biofuel and for credit. This could make it harder for us to finance and begin all our planned plant projects in 2008,” said Abengoa finance director, Armando Sanchez Falcon. 

Last year the company said it would invest more than €1bn in bioethanol capacity over the next three years to build eight new plants - four in Europe and four in the US.

However, the company has been facing difficulties as the global biofuels industry suffers from lower demand and rising raw material prices.

Abengoa was forced to temporarily cease production at its 200m litre/year factory in Salamanca, which it runs with food company Ebro Puleva, because of rising cereal prices.

Ibersecurities analysts said the bioenergy division is facing “important uncertainties" and put a “sell” rating on the stock with an objective price of €21, down 9.9% from Abengoa’s current share price.

Bookmark Simon Robinson's Big Biofuels Blog for some independent thinking on biofuels

By: Ivan Castano Freeman
+44 20 8652 3214

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