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CropEnergies' ethanol output down by 8% to 257,000 cu m in first quarter of FY 2018-19

London — CropEnergies reduced its ethanol output by 8% to 257,000 cu m in March-May, the first quarter of the 2018-19 financial year, the Germany-headquartered producer said in its interim report Wednesday.

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The company said production utilization and raw material use were adjusted in line with market conditions.

The significant drop in ethanol prices over the period, even below gasoline at some point, resulted in a challenging margin environment and a 17% fall in revenues to Eur192 million (about $225 million).

Operating profits also plummeted to Eur4.580 million from Eur23.539 million the previous year.

The S&P Global Platts T2 ethanol assessment averaged Eur440.17/cu m FOB Rotterdam over March-May 2018, compared to Eur573.27/cu m over the equivalent period in 2017 and Eur494.10/cu m in 2016.

But sales prices for animal feed products were relatively steady, somewhat stabilizing revenues, although the production of dried food and animal feed products was also slightly lower in this quarter. High grains prices added to the margin pressure for the company, but CropEnergies expects an improvement in the ethanol pricing environment over the course of the year. CropEnergies has production facilities in four locations with the following annual ethanol production capacities: Zeitz in Germany (400,000 cu m), Wanze in Belgium (300,000 cu m), Loon-Plage in France (190,000 cu m), and Wilton in Northeast England (400,000 cu m). CropEnergies also commented on the updated Renewable Energy Directive Agreement by the European Parliament, Council and Commission, seeing the increase of the renewable energy target in transport to 14% as a positive development, alongside the phasing out of palm oil by 2030. The producer expressed some doubts regarding the benefits in the use of multipliers for electric vehicles and stressed the importance of rapid and targeted implementation at the member state level.

--Chrysa Glystra, chrysa.glystra@spglobal.com

--Edited by Jeremy Lovell, jeremy.lovell@spglobal.com