LEIPZIG (dpa-AFX) - After a weak third quarter, biofuel producer Verbio is hoping for better business by the middle of the year. As expected, the downward trend from the second quarter could not yet be reversed, the company announced in Leipzig on Tuesday. The Management Board now assumes that earnings before interest, taxes, depreciation and amortization (EBITDA) for the financial year (to the end of June) will be at the lower end of the previously announced range of EUR 120 to 150 million. This implies a significant increase in operating profit in the final quarter, it said. The share price rose.

The SDax share price rose by almost 10 percent, reaching its highest level since the beginning of February. However, investors with a medium-term investment horizon will gain little from this: in the past three years, the share has lost more than a third of its value. In the longer term, however, things are looking better again: Over a five-year period, it has almost tripled in value, and over the past ten years it has even increased well over tenfold.

Verbio believes that the reason for the downward revision of the annual forecast is the lower average product margins and the low premiums for ethanol and greenhouse gas reduction (GHG) in new contracts. In mid-January, the Leipzig-based company already had to cut its previously set targets for the current financial year due to the lower sales prices.

In the third quarter (to the end of March), turnover fell by 8 percent to just over 409 million euros. However, the operating result (EBITDA) plummeted by 83 percent to 7.3 million euros. According to Verbio, this was also due to increased personnel costs and hedging transactions in the biodiesel segment. The bottom line was a loss of over 11 million euros, after a profit of 22 million euros a year earlier.

The company is still affected by the narrow margins, wrote Jefferies analyst Constantin Hesse. If this improves, as well as capacity utilization at the US site in South Bend, the fourth quarter could be strong./lew/niw/stk