Baarerstraße 53 / 55
6304 Zug, ch
+49 (69) 58997306
BIOPETROL continues its strong growth
- Sales up more than 50%
- Loss in Q2 stopped
- Prospects slightly brighter
The 2nd quarter of 2008, like the first, was burdened by rising prices for rapeseed oil and soya oil, heavily subsidized biodiesel imports (B99) from abroad, as well as by the tax of 15 eurocents per litre, so margins remained under pressure. Nevertheless, as expected, the 2nd quarter was better on the whole than the first for the BIOPETROL group. We were able to exploit the logistical advantages of our seaport locations at Rostock and Rotterdam and expand our international trade in biodiesel and biodiesel components. Sales rose 51.3% above the 1st half of 2007 (EUR 92.4 million) to EUR 139.9 million. At EUR 83.3 million, sales in the 2nd quarter of 2008 once more rose strongly over the figure for the 1st quarter of 2008 (EUR 56.6 million). In the 1st half of this year, BIOPETROL sold 138,307 tonnes of biodiesel (1st half of 2007: 116,729 tonnes) and 5,557 tonnes of pharmaceutical-grade glycerine (previous year: 7,341 tonnes).
The trend in oil prices on the German biodiesel market also provided slight relief, since the price difference between biodiesel and fossil diesel at filling stations reached the 10-eurocent level necessary for sales of biodiesel in the B100 market, more frequently than in the 1st quarter. In the 2nd quarter, again, the introduction of the current blending quota of 5% by volume did not, either in terms of value or quantity, lead to the improvement in the marketing situation that politicians expected, because the market continues to buy cheaper (B99) imports or to use low import prices as benchmarks in their negotiations with the European biodiesel industry. Consequently, in this quarter again a number of biodiesel producers have closed down their installations or filed for insolvency. Many of those that are still producing are being operated well below capacity.
As at 30 June 2008, the total number of persons employed by BIOPETROL was 153 (end of 2007: 120). The latest increase can essentially be ascribed to the recruitment of employees in Rotterdam to prepare for the commissioning of the works.
Margins remain under pressure:
Raw-materials prices that are still too high on average, rising energy costs, and the high preproduction costs associated with the construction of our plant in Rotterdam still prevent our results keeping step with the sales trend. On the supply side, cheap imports of B99 from US well as European overcapacities are putting pressure on margins. In the 1st half of the year, the EBITDA fell to EUR -1,605,000 (previous year 4,556,000) and the EBIT was reduced to EUR -3,179,000 (previous year 3,143,000). Correspondingly, the EBITDA and EBIT margins fell to -1.1% (previous year 4.9%) and -2.3% (previous year 3.4%) respectively. The group's net loss pro rata temporis reached EUR -7,148,000, after a profit of EUR 2,695,000 in the 1st half of the previous year. Compared with the 1st quarter of this year, however, distinct progress can be recognized in the course of the year. At the end of March 2008, the EBITDA was still EUR -5,521,000 and the EBIT was EUR s - 6,314,000. The group's net loss remained virtually unchanged from the end of March 2008, i.e. the 2nd quarter ended almost "at break even". The result is also affected by the valuation of derivative financial instruments at market prices on the respective reporting date, in accordance with IFRS, as well as the provision for anticipated losses from sales contracts on the balance-sheet date and the report cut-off date. Thus, on balance, there was a valuation gain of EUR 1,848,000 over the end of 2007. Without this effect, the 1st- half result (before taxes) would be worse by this amount.
As in the previous year, the undiluted net profit per share is determined on the basis of 37,000,000 shares. At the end of the 1st quarter, it reached EUR -0.19 and remained unchanged at this value until the end of the half-year. In the same period of the previous year it amounted to EUR 0.07.
Negative cash flow - but a solid financial foundation:
Operating cash flow was negative in the period from January to June 2008, at EUR 17,382,000. This development is to be ascribed to the changes corresponding to the trend of business, primarily in inventory, trade debtors and other assets (altogether EUR - 13,801,00), as well as to the operational loss. Cash flow from investment activity (including a part-repayment of subsidies received) was EUR -11,917,000. Cash flow from financing activity is characterized by the interest payment for the convertible bond (EUR 3,000,000) and the first use of part of the line of credit for financing current assets. The BIOPETROL group has agreed a line of credit with a first-class credit institute since 2007, for the purpose of financing current assets. This permits the financing of operations transactions up to an amount of EUR 30,000,000. On the balance-sheet date, short-term financial liabilities amounted to EUR 5,461,000. On the reporting date, BIOPETROL had more than EUR 3,742,000 in liquid funds. The ratio between equity capital and borrowed capital has changed only slightly from the end of 2007, at 37.6% (31 December 2007: 38.3%).
In a persistingly very difficult business environment, BIOPETROL expects to do better than its competitors. BIOPETROL is increasingly succeeding in exploiting its good locations, its modern technology, and its developing trade in pharmaceutical-grade glycerine. We see the coming months as characterized by good harvests of oil plants, less intensive speculation in raw materials, at least a reduction in the extent of heavily subsidized B99 imports, the mandatory use of raw materials derived from sustainable sources, a relief of the burden on the market as overcapacities are reduced, increasing interest on the part of all European countries in using biodiesel, the start of a mandatory blending quota of alternative fuels in the USA, and a European energy policy oriented once more towards its original objective, the safeguarding of supplies.
Work is being done at full stretch on identifying additional fields of application for biofuels.
The Biofuel Oil working group of the specialist committee on the standardization of mineral oil and fuels, for example, has presented a draft standard for alternative heating oil. At the International Oilseed Producers Dialogue (IOPD) in Berlin on 16-17 June 2008, the representatives of the producer associations spoke out in favour of the production of oilseed and vegetable oil for use in the food and animal feeds sectors, in addition to the utilization of their material and energy content, oriented not only towards sustainability but also towards increasing productivity. The dialogue made it clear yet again that the sustainable production of biodiesel is not in competition with food production but actually supplements it with the rational recycling of the superfluous vegetable oils that are produced during the manufacture of animal food.
The comprehensive quarterly report (Q2 as at 30 June 2008) is published in German and English on the company's website at www.biopetrol-ind.com.
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