Abengoa reports earnings growth, debt reduction

By Susanne Retka Schill | August 29, 2013

Abengoa reported improved market conditions in its biofuels segment, and overall strong results for the first half of the year ending June 30.

The Spain-based company develops technology solutions for sustainable development in the energy and environment business, with 30 percent of its revenues coming from its U.S. operations which include ethanol production along with solar and other projects. Another 27 percent of revenues come from Latin America, 18 percent from Spain, 12 percent from the rest of Europe and 13 percent from Asia and Africa.

During the first six months of 2013, Abengoa generated €161 million ($213 million) of cash from its operating activities; while it closed the first half with total cash and cash equivalents of €3.2 billion and a net corporate debt of €2.4 billion, which represent a corporate net leverage ratio of 3.2x, versus 3.7x on December 2012.

Revenues reported for the industrial production segment, which just includes the bioenergy business, increased by 8 percent up to €984 million. Earnings before interest, taxes and depreciation also increased up to €41 million, compared to €5 million in the first six months of 2012, an increase of 681 percent. The better results in the first half of 2013 were mainly due to the higher ethanol sales prices in Europe and the United States and the higher cane crushed capacity in Brazil, along with a significant increase of the crush spread in Europe and the United States, the company reported in its earnings release.

Manuel Sanchez Ortega, CEO of Abengoa, said: "Once again, we have been able to deliver another strong quarter, maintaining our double-digit top line and operating growth while increasing our visibility for the remainder of 2013 and 2014. Our E&C business is facing an excellent momentum in the market, thanks to our diversification, with new significant contract awards taking backlog to above €7.1 billion.  And what is most important, the vast majority of these new awards will require no equity contribution from Abengoa, thus helping us to achieve our reduced CAPEX targets from 2014 on.  I am also satisfied to say that we are seeing improved market conditions in biofuels, and that the electric sector reform announced by the Spanish government in July will finally remove the uncertainty we've suffered for almost two years."