Green Plains reports first quarter loss, expects improvement

By Ann Bailey | May 03, 2016

Green Plains reported losses of $24 million in the first quarter of 2016.  That amount exceeds the loss of $3.3 million the same quarter a year ago by nearly $21 million.

While first quarter 2016 revenue of $749.2 million was $11.2 million higher than first quarter 2015 revenue, cost and expenses during the first three months of 2016 also were higher than during the same period in 2015.  The cost and expenses were $771.8 million for the first quarter of 2016, compared with $734.3 million for the first quarter of 2015, Green Plains reported.

Continuing weak margins provided Green Plains with little opportunity to generate a profit during the first three months of 2016, said Todd Becker, Green Plains president and CEO. The company focused on maintaining strong liquidity position to remain well-positioned during the cyclical downturn and for future growth activities within its supply chain, he said.

Green Plains produced 247 million gallons of ethanol during the first quarter of 2016, 14.5 million more than the 232.5 million gallons the company produced during the same period a year ago. The consolidated crush period during the first quarter of this year was $500,000 or 0 cents per gallon, a decline from $14.9 million or 6 cents per gallon the first quarter of 2015.

“The forward ethanol margin has improved since the beginning of the second quarter and we have hedged a portion of our future production,” Becker said. “We believe the ongoing growth in global and domestic ethanol blending will continue to drive better market fundamentals for the industry and are optimistic the margin environment will improve during the second quarter of 2016.”

Green Plains officials said during a conference call to investors that they expect that the supply-demand equation will be more in balance as this year progresses. The industry overproduced during the first three months of 2016, but in the last few weeks, demand has begun to catch up to supply, the officials noted.

Meanwhile, Green Plains expects exports to remain strong and domestic demand to improve, the officials said. Another reason the economic outlook for the remainder of 2016 is positive is that ethanol is once again trading at a discount to gasoline and that makes it more cost-effective for refiners to blend their product with ethanol.