Print

Recession continues to impact ethanol industry

By Erin Voegele | May 04, 2009
Web exclusive posted May 12, 2009, at 5:20 p.m. CST

The economic recession is continuing to have a negative impact on the ethanol industry. Several ethanol producers recently issued financial results for the quarter ending March 31. The quarterly filings predominantly report reduced profitability and production when compared to financial results one year earlier. At least one company, Pacific Ethanol Inc., has stated that it will soon be forced to file for bankruptcy if it is unable to restructure its debt and obtain sufficient liquidity in the near-term.

Archer Daniels Midland Co. announced net earnings of $8 million for the quarter ending March 31. Net earnings for the same quarter in 2008 were $517 million. Net sales and other operating income decreased 21 percent to $14.8 billion. According to the company, segment operating profit for the first quarter of 2009 decreased 72 percent to $254 million, down from $913 million last year. A portion of this decline is attributed to reduced operating profit for corn processing. The operating profit of ADM's corn processing was $49 million this quarter, a reduction of $123 million from the first quarter 2008 level of $172 million. Bioproducts operating profit also decreased $167 million for the quarter due primarily to a significant decline in ethanol margins resulting from higher net corn costs, lower average selling prices and inventory write-downs.

The Andersons Inc. recently announced first quarter income attributable to the company of $5 million on revenues of $697 million. The company's Grain & Ethanol Group's first quarter 2009 operating income of $5.7 million was higher than the 2008 first quarter level of $2.2 million. This was the result of the grain business having a record quarter. However, the company's ethanol business lost less than $1 million during the quarter, which is primarily attributed to the combined performance of the company's equity investments in three ethanol LLCs. Total first quarter revenues of the company's Lansing Trade Group were $482 million, including $206 million in grain and ethanol sales. In the first quarter of 2008, the group's total revenues were $499 million, including $186 million in grain and ethanol sales.

Abengoa reported consolidated sales of 981 million ($1.228 billion) in the first quarter of 2009, an increase of 12 percent over the previous year. The EBITDA was 176.1 million ($240.2 million), an increase of 11.5 percent over the 2008 figure. The company's Bioenergy sales were 179.3 million ($244.6 million), which is down 17.5 percent from 2008. Ethanol sales are attributed to 79 percent of that 17.5 percent decrease. This is mainly due to the lower sales price of ethanol. The company sold 37.4 million gallons of ethanol in the U.S. during the first quarter of 2009, a reduction from the 48.4 million gallons sold in the U.S. during the same period of 2008.

Aventine Renewable Energy Holdings Inc. reported it sold 120.8 million gallons of ethanol during the first quarter of 2009. The company sold 211.2 million gallons of the fuel during the same period of 2008. The company also reported net sales of $236.5 million during the quarter, a reduction of 53.6 percent from the first quarter 2008 level of $509.9 million. The company's coproduct revenues also decreased from $33.3 million during the first quarter of 2009 to $22.4 million during the first quarter of 2009. This 32.7 percent decrease is a result of significantly lower coproduct pricing and volumes for corn germ and DDGS.

To date, Pacific Ethanol has not filed a quarterly report with the U.S. Securities and Exchange Commission for the quarter ended March 31. Instead the company filed a Notification of Late Filing, citing management's need for additional time to complete the financial and other disclosures contained within the report. In the notice, the company states it has been actively seeking to restructure its debt and is seeking to raise additional debt or equity financing, and has been diligently negotiating with various lenders. According to the filing, unless the company can restructure its debt and obtain sufficient liquidity in the very near-term, it will be forced to seek protection under the U.S. Bankruptcy Code. The company currently anticipates reporting net sales of approximately $86.7 million for the quarter, a reduction from the first quarter 2008 level of $161.5 million. Pacific Ethanol is expected to file its quarterly report by May 18.
 

0 Responses

     

    Leave a Reply

    Comments are closed