Particular focus on UK plant
Mannheim, 19 September 2022 – CropEnergies AG, Mannheim, Germany, is continuously assessing the capacity utilisation of all its renewable ethanol production plants. Given the multiplication in energy and power prices in combination with continuously high raw material prices, the pressure on the cost side is increasing. Particularly from January 2023 onwards, CropEnergies can only to a declining extend benefit from hedging positions entered before energy and power prices sky-rocketed.
So far, increased costs could be offset by higher ethanol sales prices. Recently, however, ethanol sales prices have decreased significantly as an increasing volume of imports particularly from Brazil and the USA, which benefit from comparably much lower energy and raw material prices, have entered the EU and UK markets.
Against this background, CropEnergies will continue to carefully evaluate whether it will be possible to maintain the current capacity utilization of its plants from January 2023 onwards. The particular focus will be on the Ensus plant in Wilton, UK, as increased prices for natural gas and power are putting severe pressure on this plant’s profitability. The plant has an annual production capacity of 400,000 cubic meters renewable ethanol, 350,000 tonnes of dried animal feed and up to 250,000 tonnes of biogenic CO2. Within the coming weeks, management will closely monitor the energy, grain and ethanol markets and decide whether capacity adjustments or even a temporary shutdown of individual plants will be necessary. At the same time, CropEnergies calls on politicians to support companies with energy-intense production and to ensure a level playing field on the European ethanol market.
CropEnergies confirms its outlook for the current financial year 2022/23, however, and continues to expect an operating profit of EUR 215 to EUR 265 (previous year: EUR 127) million at revenues of EUR 1.47 to EUR 1.57 (previous year: EUR 1.08) billion. This corresponds to an EBITDA of EUR 255 to EUR 305 (previous year: EUR 169) million.
The outlook is based on the assumption of a continued normalised mobility behaviour. However, the effects of the Ukraine war remain difficult to assess. From today's perspective, CropEnergies generally assumes that sufficient raw materials will be available for the production of renewable ethanol as well as food and animal feed products. However, the further availability and price development on the energy markets are difficult to predict at the current time and against the background of political developments. Furthermore, it is expected that the EU member states will essentially maintain their blending targets for biofuels and that this will continue to enable high capacity utilisation. In addition, CropEnergies assumes that the – compared to the previous year – higher energy and raw material costs can continue to be at least partially offset by higher sales prices for ethanol and for food and animal feed products in the further course of the financial year.