Verbio is struggling with a weak balance sheet: high debts and future strategy!

Verbio is struggling with a weak balance sheet: high debts and future strategy!

The biofuel manufacturer Verbio is currently under pressure. The latest quarterly figures show that the company's financial situation is tense, even though EBITDA increased slightly to 8.2 million euros in the third quarter, compared to 7.3 million euros in the previous year. Despite this increase, total sales fell by 13% to 1.15 billion euros over nine months. Net financial debt increased from 32.9 million euros in June 2024 to 154.1 million euros. This high level of debt results from strategic investments in future technologies, in particular in the construction of an ethenolysis plant in Bitterfeld, which is expected to produce 60,000 tons of bio-based specialty chemicals annually by 2026.

How IT Boltwise reported that high start-up costs in the bioethanol segment are weighing on the results. Nevertheless, the biodiesel business shows stable performance. Analysts are remaining wait-and-see and have not made any significant adjustments to their forecasts following the quarterly figures. The consensus for 2026 is sales of 1.81 billion euros and earnings per share of 0.75 euros. The annual forecast for EBITDA has been specified and is in the lower end of the mid double-digit million range.

Sales development in the bioethanol segment

The first half of 2024/25 for Verbio shows an EBITDA of 14.3 million euros, after a negative EBITDA of 6.6 million euros in the first quarter. Compared to the same period last year, EBITDA was 74.9 million euros. This development is reflected in the market environment, which has continued to deteriorate, particularly due to an oversupply of greenhouse gas (GHG) reductions due to cases of fraud in the German market. However, the gross margin in the biodiesel segment rose to 64.9 million euros in the second quarter.

Net financial debt was 97.0 million euros as of December 31, 2024, up significantly from 32.9 million euros in June 2024. The increase results from negative free cash flow, which reflects investments in strategic projects. Verbio produces climate-friendly fuels and renewable products from biomass at various locations in Europe, Asia and North America, which could contribute to diversification and stability of revenue streams.

Forecasts and challenges

The forecast net financial debt should amount to a maximum of 190 million euros by the end of the year. Unexpected technical quality problems in the existing plant in Nevada, USA, affect the EBITDA forecast, as the utilization of the ethanol line there is currently less than 25%. However, Verbio is hopeful that the recovery in GHG quota prices will accelerate in 2025.

Looking ahead, it remains to be seen whether the company can make the operational progress required to ensure a sustained recovery of its stock. Attention is also being paid to strategic investments and stabilization in the biodiesel business area, which has so far proven to be more stable. The milestones for the future have been set, but remain fraught with uncertainty.