Quarterly earnings indicate ethanol producers' resolve

By Bryan Sims | January 12, 2009
Fluctuating corn and lower ethanol prices have caused some ethanol producers to restructure their financial obligations in an effort to avoid an interruption in production, or asset liquidation. Ethanol companies that managed to preserve capital in order to sustain operations exhibited resiliency in their quarterly earnings released in late 2008.
Pekin, Ill.-based ethanol producer and marketer Aventine Renewable Energy Holdings Inc. posted a net income of $2.5 million during its third quarter of 2008, compared with a loss of $1.9 million in its second quarter. The company also generated $14.3 million in cash from its operations.

Maumee, Ohio-based The Andersons Inc. posted a net income of $12.8 million on revenues of $906 million in its third quarter 2008 earnings report versus $10.6 million on $554 million in revenue during the same reporting period in 2007. The company's grain and ethanol group's operating income took a hit, generating $9.4 million compared with $13.7 million during the same quarter in 2007.

Archer Daniels Midland Co.'s first-quarter 2009 earnings more than doubled on the back of higher grain commodity prices. The Decatur, Ill.-based agri-giant posted net earnings of $1.05 billion for its quarter ending Sept. 30, 2008, an increase of approximately 138 percent when compared with the $41 million it reported during the same quarter in 2007.
Cambridge, Mass.-based cellulosic ethanol producer and specialty enzyme company Verenium Corp. posted a net loss of $133,242 in its third quarter, up from a net loss of
$20,493 posted during the same quarter of 2007.

High corn prices and suspended construction undercut Pacific Ethanol Inc.'s third quarter 2008 earnings. The Sacramento, Calif.-based ethanol producer posted a net loss of $54.9 million, compared with a $4.8 million loss it accrued during the same quarter in 2007.
MGP Ingredients Inc. posted a net loss of $17.2 million for its first quarter of fiscal year 2009, which ended Sept. 30, compared with a net loss of $353,000 in its first quarter 2008 fiscal year. The diversified agricultural products company, which owns and operates two ethanol plants in Kansas and Illinois, saw a 16 percent decline in ethanol sales compared with its first quarter 2008 report.

VeraSun Energy Corp. posted a $476.1 million net loss for its third quarter of 2008. However, revenues increased 389 percent to $1.08 billion, compared with its third quarter of 2007.

In addition to these quarterly earnings statements, Glacial Lakes Corn Processors, the parent company of Glacial Lakes Energy LLC, collected $10 million from its shareholders in late November. The move was part of the company's recapitalization efforts to obtain working capital to sustain operations at its ethanol plants in South Dakota.

The volatility in the corn and ethanol markets hasn't been exclusive to U.S producers, either. German biofuels producer Vereinigte BioEnergie AG (Verbio) reported financial losses in its ethanol division during the first nine months of 2008. The company attributed high grain prices and decreased sales volumes to increased German taxes on biofuels. For this reason, its ethanol plants in Schwedt and Zorbig, Germany, were offline at times in 2008.

Meanwhile, two U.S. ethanol producers discontinued operations in December due to volatile economic conditions. Altra Biofuels temporarily halted production at its 60 MMgy plant in Coshocton, Ohio, and indefinitely shut down its 88 MMgy facility in Cloverdale, Ind. Pine Lake Corn Processors LP also idled its 20 MMgy plant in Steamboat Rock, Iowa.