CropEnergies lifts profits hopes again, as ethanol prices soar

20.12.2016

Shares in CropEnergies rebounded by 7% after the bioethanol group, which owns the UK's Ensus plant, lifted its results forecast for second time, against a backdrop of revived prices of the biofuel.

Shares in the group, which is controlled by German-based sugar giant Suedzucker, hit E4.774 in Frankfurt in early deals, before easing back to stand at E4.72, a 6.0% gain on the day.

The gain followed CropEnergies' upgrade for a second time of its results forecast for the year to the end of February 2017, this time lifting the estimate for revenues to E760m-790m, from $e670m-720m.

That would represent a rise of at least 5% year on year in revenues, and a figure well above the E698m analysts have pencilled in.

The forecast for operating profits was lifted to E70m-85m, from 50m-80m.

'Positive developments'

The group attributed the upgrade to the "positive developments" represented by outline results for the August-to-November period, showing a "jump" in revenues of 28% to E215m.

Operating profit for the quarter – while at E18 down some E6m year on year - was "higher than expected".

Although CropEnergies failed to expand on the reasons behind its better-than-expected performance, the announcement comes against a backdrop of recovering ethanol prices.

Rotterdam ethanol prices, as measured by Platts, having edged higher by some 3% over the August-to-November period, have soared a further 12% this month, buoyed by the revival in energy markets inspired by higher crude oil values, after cutbacks agreed by producing countries.

'Key driver'

Coupled with soft world wheat prices too, this has provided a promising backdrop for the reopening of the Ensus plant, in northern England, in July after a shutdown prompted by a spell of poor margin prospects, and which allowed some factory improvements to be made.

CropEnergies said in October that "following successful testing of the technical modifications" at Ensus, the group's "entire bioethanol production potential of 1.3m cubic metres is now available, and will be used depending on the market situation and the resulting cost and earnings situation".

Defra, the UK farm ministry, two weeks ago, forecasting a 7.3% rise in human and industrial use of wheat domestically in 2016-17, termed as the "key driver" of the forecast the revival in the country's bioethanol sector.

Defra highlighted "an anticipated increase in usage by the bioethanol and starch sector following the reopening of Ensus in July".


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