Investing.com -- Shares of Verbio (DE:VBK) fell by 5.4% as the company reported a decline in third-quarter sales and earnings that missed analyst expectations.
The biofuel producer’s sales dropped 3.5% year-on-year (YoY) to €394.9 million, falling short of the Visible Alpha consensus of €403.1 million. Earnings before interest, taxes, depreciation, and amortization (EBITDA) also disappointed, coming in at €8.2 million compared to the consensus estimate of €15.6 million and €7.3 million in the same quarter the previous year.
The slight increase in sales quarter-on-quarter was attributed to the Bioethanol/Biomethane segment, which saw a 23.5% rise to €181.5 million, despite a 3.5% drop YoY. This growth was partially negated by a decrease in the Biodiesel segment, which experienced a 3.4% fall YoY and a 13.3% reduction quarter-on-quarter to €210.3 million, mainly due to lower production volumes in Canada.
EBITDA for the quarter showed an improvement from the second quarter but was down YoY. The decline in margin compared to the previous quarter was primarily due to an increase in rapeseed prices, resulting in lower spreads. However, the EBITDA was bolstered by improved trading in other areas.
Verbio’s balance sheet reflected an increase in net debt to €154.1 million, up from €32.9 million at the end of the previous fiscal year in June 2024. The rise in debt was linked to negative free cash flow stemming from capital expenditures in the US and a specialty chemicals production plant. The equity ratio also decreased to 63.1% from 67.4% in the previous fiscal year.
Looking ahead, Verbio provided guidance for the fiscal year 2024/2025 at the lower end of the mid double-digit million range, indicating an EBITDA of €30-40 million, which is below the Visible Alpha consensus of €52.5 million. The company also expects net debt to increase to a maximum of €190 million.
Analysts at Jefferies commented on the results, stating, "Verbio’s 3Q24/25 print is somewhat below expectations due to lower profitability in biodiesel."
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