Biopetrol increases sales revenues and profit
- Sales revenues up by over 60%
- Gross profit margin 12.3%
- Net income up by more than 28%
- Positive third-quarter cash flow from operating activities
- Rising raw material prices, cheap imports, surplus capacities burden margins
BIOPETROL INDUSTRIES AG increased consolidated sales revenues by over 60% to €155.4 million in the first nine months of the 2007 financial year. The previous year’s figure was €97.1 million. The gross profit improved by nearly 52% to €19.0 million (previous year: €12.5 million) and the gross profit margin remained at high level of 12.3% (previous year: 12.9%). Earnings before interest, taxes, depreciation and amortisation (EBITDA) rose by over 12% to €5.6 million (previous year: €5.0 million). Net income was up by over 28% to €3.4 million (previous year: €2.7 million). The nine-month earnings before interest and taxes (EBIT) decreased to €3.7 million (previous year: €4.0 million). Cash flow from operating activities was €-6.7 million (previous year: €10.9 million) after nine months. For the current quarter an inflow of €5.5 million was reported.
A continuous rise in raw material prices along with cheap imports from the United States have placed a damper on the market environment and led to continuous pressure on margins for all German biodiesel producers. The construction of our third plant in Rotterdam means expenditure for the BIOPETROL Group without any corresponding income yet.
Strong increase in sales revenues
The additional capacity at our Rostock plant enabled us to increase sales strongly in the first nine months of 2007. In all, we sold 199,817 tonnes (previous year: 114,320 tonnes) of biodiesel in this period. This corresponds to an increase of nearly 75%. Sales of pharmaceutical glycerine were down to 10,021 tonnes (previous year: 12,709 tonnes). At present BIOPETROL has a pro rata annual production capacity of 236,000 tonnes of biodiesel. Capacity utilisation is 85%. Once the new plant in Rotterdam goes into service, total biodiesel production capacity will be 750,000 tonnes per year.
Gross profit increase in Q3 demonstrate operational strength
In the third quarter of 2007 sales climbed by over 80% to €63.0 million (previous year: €34.8 million). This increase was primarily due to the start of production in Rostock. This enabled us to sell 83,088 tonnes (previous year: 40,910 tonnes) of biodiesel, an increase of 103.1%. The gross profit rose by 54.4% to €6.5 million (previous year: €4.2 million), demonstrating the BIOPETROL Group’s operational strength. Tougher conditions in raw materials procurement, imports and surplus capacities in the biodiesel industry in general along with building up manpower and hiring administrative personnel for the Rotterdam plant that is still under construction reduced third-quarter EBITDA to €1.2 million (previous year: €2.8 million). EBIT fell to €0.6 million (previous year: €2.0 million) and net income to €0.7 million (previous year: €1.2 million).
Stable balance sheet – High equity ratio
Funding of the BIOPETROL Group’s planned growth stands on firm foundations. A convertible bond was placed with a volume of €75 million in February 2007 ensuring the funding for future capital expenditure. As at 30 September the equity ratio was 42.0% and in line with our planning. The balance sheet total rose to €177.9 million after €87.4 million at the end of 2006.
Burden of higher taxation as of 2008
Retention of the next stage in taxation of biodiesel sold on the free market (B100) is weighing heavily on all biodiesel producers. From 1 January 2008 the tax rate shall be increased by €0.06 per litre to a total of €0.15 per litre of biodiesel. In return, consideration is being given to increasing the mandatory blending requirement for the mineral oil industry from 5% to 7%. Though that may be a step in the right direction, a higher tax rate in the B100 market will still inevitably lead to sustained market consolidation of the German biodiesel industry. That means the threat to a young key industry in Germany along with a large number of job losses. Continued cheap imports including subsidised imports from the United States (B99) are keeping further pressure on German producers.
BIOPETROL INDUSTRIES AG’s strategy of relying on economies of scale and pressing ahead with internationalisation has proved to be right. The Rostock site is superbly located for markets in Northern Europe. With the new plant in Rotterdam we will also soon have a production facility with optimal logistics links to Europe’s largest refinery centre. We will therefore succeed in reaching our target of generating more than 60% of our sales revenues outside Germany by 2008.
The comprehensive quarterly report (Q3 as at 30 September 2007) is published in German and English on the company’s website at www.biopetrol-ind.com.
BIOPETROL INDUSTRIES AG
With its German, Dutch and Swiss subsidiaries, BIOPETROL INDUSTRIES AG, which has its head office in Zug (Switzerland), produces and sells biodiesel and pharmaceutical-grade glycerine of the highest quality. Among our customers are the oil industry and oil traders, large-scale fleet operators, public short-distance transport, as well as the agricultural and construction industries. The pharmaceuticals and cosmetics industries are in addition supplied with bioglycerine of pharmaceutical quality.
At the present date, BIOPETROL INDUSTRIES AG has annual productive capacities in Schwarzheide and Rostock of around 350,000 tonnes of biodiesel and 30,000 tonnes of pharmaceutical-grade glycerine. In Rotterdam, BIOPETROL is building an installation with an annual productive capacity of 400,000 tonnes of biodiesel and 60,000 tonnes of bioglycerine. By the end of 2008, annual capacity should then be more than doubled to a total of 750,000 tonnes of biodiesel. Further expansion of capacity in Rotterdam is planned. We are working actively on extending our product range, based on the coproduct bioglycerine.