Verbio in the Pivotal Point Check: US business bears fruit - EBITDA of €120 to €160 million to be achieved!
- Verbio achieved record production of more than 1.0 million tons of biodiesel and bioethanol and 1,100 GWh of biomethane for the first time in the past financial year.
- The company is exposed to unfair competition from imports of "green deceptive packaging" from Asia and fictitious climate protection projects for alleged greenhouse gas reduction.
- In the current financial year, the result in the USA is expected to make a positive contribution to the operating result for the first time with 120 to 160 million euros.
The biofuel manufacturer only just achieved its profit target in the past financial year due to the expansion of its US business, as the company announced on September 26, 2024. However, the share price jumped significantly thanks to the prospect of good business in the US. However, this only made up for a small part of the heavy losses from the year to date. Since the beginning of the year, the company has still lost almost 40% of its stock market value.
In the past financial year, revenue fell by 16% year-on-year to EUR 1.66 billion. Earnings before interest, taxes, depreciation and amortization (EBITDA) amounted to 121.6 million euros in the past financial year. The result was thus at the lower end of the target corridor, which Verbio had capped at EUR 120 to 150 million in January. The operating profit now achieved was only around half that of the previous year.
Verbio cited the start-up costs for its growth projects in the USA as the reason for the sharp decline, in addition to the lower quota prices for greenhouse gases. Market conditions are also difficult due to "massive, questionable imports of advanced biodiesel from Asia". In the current financial year 2024/25, earnings in the USA are expected to make a positive contribution to the operating result (EBITDA) for the first time. As already announced, the Executive Board aims to achieve between EUR 120 and 160 million in the Group. A proposal will be made at the Annual General Meeting in December to leave the dividend at 20 cents per share.
In the 2023/24 financial year, Verbio achieved record production of more than 1.0 million tons of biodiesel and bioethanol and 1,100 GWh of biomethane for the first time. Despite the record production, Group sales in 2023/24 were down on the previous year at EUR 1.66 billion. According to Verbio, one reason for this is that falsely declared Chinese imports of supposedly advanced biodiesel have been flooding the European market since the beginning of 2023. In fact, many climate protection projects submitted to the Federal Environment Agency only existed on paper, and no real CO2 savings were achieved.
Verbio has a market capitalization of 1.19 billion euros. In the 2025 financial year, revenue is expected to reach 1.83 billion euros. An increase to EUR 2.37 billion is expected by 2027. Earnings per share are expected to amount to EUR 0.98 in the 2025 financial year and increase to EUR 1.48 by 2028. The P/E ratio for 2027e is 12.6. The German parliament wants to finally react and tackle the reversal of falsified climate protection projects. The difficult market environment is likely to be largely priced into the share.
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