Austria's leading ethanol producer Agrana said Friday it expects weaker results for its 2014-15 (March-February) financial year than previously anticipated due to sustained pressure on sugar and ethanol prices which is likely to persist.
The company said its EBIT in fiscal Q1 (March-May) fell to Eur52.9 million ($71.9 million) from Eur59.6 million in the same period of last year on price declines across its sugar and fruits segment as well as ethanol.
The Vienna-based producer also said softer sugar and ethanol prices, which have been under pressure from a supply glut, are likely to result in lower earnings for the full 2014-15 financial year.
Revenue is projected to fall as tumbling prices will more than offset a slight increase in volumes sold, Agrana said.
The company will publish further details of its business performance on July 10, it said.
Agrana's profit warning echoes reports from other European ethanol producers of deteriorating margins due to ample supply and dwindling demand.
The company operates two starch and ethanol manufacturing plants with a combined capacity to produce a maximum of 400,000 cubic meters of the biofuel each year.
It fully owns a plant in Pischelsdorf, Austria, and it has a 50% stake in Hungrana's Szabadegyhaza facility, in Hungary.
In 2013-14, Agrana's ethanol output rose 1.4% from the previous comparable period to 336,000 cubic meters (336 million liters or 88.7 million gallons), but selling prices and operating margins fell.
Fuel ethanol sold in Rotterdam, where European benchmark prices are assessed, slumped to Eur475/cu m FOB on Thursday's close from a 2013 high of Eur682.25/cu m hit on May 10, according to Platts.
Agrana said last month that any impact from higher sales in 2014-15 "will probably not be able to make up for the price decline -- especially in saccharification products and bioethanol -- as a result of the high levels of supply on the market."
Agrana is part of the Suedzucker group, which includes CropEnergies.
