VERBIO Vereinigte BioEnergie AG

Earnings Release • Nov 8, 2012

News Details

Corporate | 8 November 2012 09:10

VERBIO Vereinigte BioEnergie AG: Competition distorting imports make the start of the new financial year 2012/2013 harder for VERBIO AG

VERBIO Vereinigte BioEnergie AG / Key word(s): Quarter Results

08.11.2012 / 09:10

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Competition distorting imports make the start of the new financial year 2012/2013 harder for VERBIO AG

– Falsification of the market caused by subsidised biodiesel imports from non-sustainable production out of Argentina and Indonesia

– Germany is swamped with biodiesel made of used cooking oil from across the world

– Current framework conditions do not permit issuance of a reliable outlook

Zörbig/Leipzig, 8 November 2012 – In the first quarter of its new business year 2012/2013, VERBIO Vereinigte BioEnergie AG (VERBIO) reports group revenue of EUR 217.5 million (Q1 2011/2012: EUR 224.4 million), thereby falling short of the value in the previous year. Lower sales revenues on the one hand and risen costs of personnel due to the development of biomethane production as well as other expenses on the other hand have led to a result of EUR 1.6 million (Q1 2011/2012: EUR 10.3 million) before interest, taxes and depreciations (EBITDA) and a group operating result (EBIT) of EUR -4.9 million (Q1 2011/2012: EUR 3.8 million). In consequence of the subsidised biodiesel imports, the result was burdened by low plant utilisation, high margin pressure as well as losses from hedging transactions totalling EUR 6.8 million (Q1 2011/12: earnings of EUR 6.7 million) to which the requirements for hedge accounting did not apply. As at the cutoff date 30 September 2012 the equity ratio was 45.2 percent. VERBIO has funds available in the amount of EUR 40.3 million.

Market situation: Sustainability Directive only 'applies' to German producers

Since the start of the calendar year 2012, the German market for biodiesel is in distress due to the import of subsidised biodiesel (from soya bean oil and palm oil) from Argentina and Indonesia) and imports of biodiesel produced from used cooking oil, which have risen significantly compared to 2011. In particular the imports from Argentina and Indonesia largely do not comply with the requirements of the REDcert-EU or the German Biofuels Sustainability Directive ('Deutsche Biokraftstoff-Nachhaltigkeitsverordnung'). Facilitated by switched sustainability certificates, these imports are counted toward the quota for fulfilment of the German biofuels targets. Unfortunately the German government ministries have to this day been unable to agree on which actions to take against these illegal practices. In consequence, German producers continue to be punished in multiple ways. Price pressure caused by the subsidised imports and a situation in which the investments in a sustainable production of biofuels in accordance with the law are reduced to absurdity: the German biofuel targets are fulfilled to a large extent with biodiesel from Argentina and Indonesia.

EU amendment promotes the idea of sustainability

The proposal for an amendment to existing directives of Renewable Energy, which was brought into discussion by the EU Commission, should find positive mention. The total quota of ten percent to be fulfilled starting as of 2020 is to remain unchanged and is merely to be split: five percent allocated to biofuels of the first generation and five percent allocated to biofuels of the second and third generation. It is thereby clear that 'normal' biodiesel and bioethanol will be continued past the year 2020 and that E10 will remain on the market because even to reach the five-percent target, a ten-percent share of bioethanol in petrol is necessary. The EU Commission thus also sets a clear signal that the present biofuel share is a right and good thing. Biomethane produced from agricultural waste materials is a biofuel of the second generation and is among those with the greatest potential to become the biofuel of the future.

Current framework conditions do not permit issuance of a reliable outlook

There is no statement on the part of the politics, how it shall be secured, that no subsidised biofuels are penetrating in a competition distortive way the German market and that the German biofuel targets are only fulfilled by sustainably produced biofuels. An evasion of the German Biofuels Sustainability Directive must become impossible. Due to this uncertain framework the Management Board withdraws the targets for the financial year 2012/2013 given in the previous financial year. As soon as more transparency is given to the further development the Management Board will disclose a new reliable outlook.

Segment performance

Biodiesel in the first quarter continues to be burdened by illegal imports

The above-described situation in the biodiesel market has led to reduced utilisation of our biodiesel production plants and sales to the domestic and foreign admixture market dropping below the value of the same period in the year before. The export rate for biodiesel increased in the reporting period to 18.3 percent, while it was at around 10.7 percent in the reference period of the previous year. In the first quarter 2012/2013 sales revenues in the biodiesel segment were earned in the amount of EUR 131.0 million (Q1 2011/2012: EUR 127.2 million). The increase of sales revenues coinciding with reduced production is essentially caused by the risen price level. Increased expenses for material and greater costs of personnel relative to the sales revenues entailed a segment result in the amount of EUR -4.0 million (Q1 2011/2012: EUR 5.3 million).

Productivity of the bio-refinery further optimised

With a production volume of 36,284 tons of bioethanol in the first quarter 2012/2013, the produced quantity was considerably lower than for the same period in the previous year (Q1 2011/2012: 60,786 tons). Due to high raw materials prices, the utilisation of the bioethanol plants was adjusted to the present capacity of the biomethane plants. This minimised the consumption of crop to an optimal production of biomethane. Sales revenues in the amount of EUR 51.7 million (Q1 2011/2012: EUR 75.1 million) in the first quarter of 2012/2013 resulted from this measure. The production of biomethane increased again, production plants were optimised, and specific production costs lowered further. 98,130 MWh biomethane were produced in the first quarter 2012/2013. This represents an increase of 50 percent compared to Q1 2011/2012 (Q1 2011/2012: 65,278 MWh). The segment result amounted to EUR 1.2 million, in the previous year's period it was EUR -1.2 million.

The development of demand in the market remains stable for bioethanol, higher consumption of bioethanol in Germany is primarily spurned by the E10 fuel type.

Biomethane – production increase by 50 percent

Biomethane as biofuel has become significantly more important in Germany in the past 18 months. By now, approx. 20 percent of natural gas has been replaced by biomethane. Utterly quiet and without the great stir which surrounded the market introduction of E10, 100 percent pure biomethane is sold at more than 100 natural gas stations in Germany.

Märka as part of the value creating chain continues to gain importance

In the first quarter of 2012/2013, Märka GmbH earned EUR 32.7 million (Q1 2011/2012: EUR 19.4 million) from grain, oil seed and fertiliser trades with third parties. Owing to the very good harvest, substantially more grain and oil seeds were included in acquisitions than in the year-to-date period in 2011. The segment result amounted EUR -2.4 million (Q1 2011/2012: EUR -1.1 million). Here as well, negative effects from hedging transactions due to surging raw materials prices have made an impact.

The interim report for the first quarter 2012/2013 is available (at noon) after 12:00am at www.verbio.de/en/investor-relations/news-publications/corporate-news/ .

Information about VERBIO Vereinigte BioEnergie AG (VERBIO)

VERBIO is one of the leading independent producers and providers of biofuels and is at the same time the only large industrial producer of biodiesel, bioethanol and biomethane in Europe. The nominal capacity is at a rounded 450,000 tons biodiesel, 300,000 tons bioethanol and 480 gigawatt hours biomethane per year. In the production of its highly efficient fuels, the company uses energy-saving production processes and innovative technologies of own development. The biofuels of VERBIO achieve CO 2 reductions of up to 90 percent compared to petrol or diesel. VERBIO delivers its products directly to the European mineral oil conglomerates, mineral oil trading companies, independent gas stations, freight forwarders, municipal utilities and vehicle fleets. In addition, VERBIO markets high-quality pharma glycerine for the consumer goods and cosmetics industry (glycerine is gained as a by-product in biodiesel production). Within the group, VERBIO Vereinigte BioEnergie AG acts as Management Holding. The operative business is exercised by the subsidiaries, VERBIO Diesel Bitterfeld GmbH & Co. KG, VERBIO Diesel Schwedt GmbH & Co. KG, VERBIO Ethanol Schwedt GmbH & Co. KG, VERBIO Ethanol Zörbig GmbH & Co. KG and Märka GmbH. The VERBIO stock (ISIN DE000A0JL9W6 / WKN A0JL9W) has been listed at the Prime Standard of the Frankfurt stock exchange since October 2006.

Important notice

This Corporate News contains forward-looking statements, which are based on assumptions and estimates of the company management of VERBIO Vereinigte BioEnergie AG. Although the company management is of the opinion that these assumptions and estimates are accurate, the actual future development and actual future results may differ significantly from these assumptions and estimates due to various factors. Among these factors may be, for example a change in the overall economic situation, legal and regulatory framework conditions in Germany and the EU, as well as changes within the industry. VERBIO does not assume any guarantee or liability for the consistency of the future development and the actual results achieved in the future with the assumptions and estimates expressed in this Corporate News.

End of Corporate News

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Language:	English
Company:	VERBIO Vereinigte BioEnergie AG
	Augustusplatz 9
	04109 Leipzig
	Germany
Phone:	+49 (0)341 30 85 30 290
Fax:	+49 (0)341 30 85 30 298
E-mail:	ir@verbio.de
Internet:	www.verbio.de
ISIN:	DE000A0JL9W6
WKN:	A0JL9W
Listed:	Regulierter Markt in Frankfurt (Prime Standard); Freiverkehr in Berlin, Düsseldorf, München, Stuttgart

End of News	DGAP News-Service

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