German biofuels company Verbio posted an operating loss of Eur4.9 million ($6.3 million) in July-September, the first quarter of its July-June fiscal year, compared with a profit of Eur 3.8 million a year earlier, the company said in a statement released Thursday.
The loss was due to lower plant utilization rates and increased operating costs as well as losses from hedging transactions totaling Eur6.8 million, Verbio said.
Its biodiesel segment posted a loss of Eur4 million in fiscal Q1, compared with a profit of Eur5.3 million a year earlier, while the bioethanol (including biogas) segment achieved a profit of Eur1.2 million compared with a loss of Eur1.2 million.
The company said that cheaper, "competition distorting imports" of subsidized non-sustainable biodiesel from Argentina and Indonesia had led to reduced utilization rates at its biodiesel production plants.
End users are able to transfer sustainability certificates to non-RED certified biofuels using the mass balance system laid out in the German bio-ordinance law.
Under this system, physical product and certificates are treated independently, so long as the amount of material sold matches the amount of certificates traded in at the end of the accounting period.
While biodiesel production decreased, sales revenues actually rose 3% to Eur131 million due to higher market prices.
Raw material prices also increased however and the higher input costs as well as greater costs of personnel relative to sales revenues contributed to losses in the segment, said the company.
Bioethanol utilization rates were also decreased, said the company. High raw material prices meant that bioethanol production was adjusted according to the capacity of its biomethane plants, which use byproducts from the bioethanol production process as feedstock.
"This minimized the consumption of crop [ethanol feedstock] to an optimal production of biomethane," said the statement.
As a result, sales revenues in the second segment fell 31.1% in fiscal Q1 to Eur51.7 million. Verbio's management withdrew financial targets for 2012-13 given in the previous financial year because of the "uncertain framework" related to German and EU biofuel legislation.
"As soon as more transparency is given to the further development [of legislation] the Management Board will disclose a new reliable outlook."
