Green Plains reports second-quarter loss amid robust U.S. ethanol inventories
Source: By Russell Hubbard, Omaha World Herald • Posted: Wednesday, August 2, 2017
Green Plains Inc., the nation’s second-largest ethanol producer, said it had a loss in the second quarter, after profit margins collapsed amid abundant supplies.
The Omaha-based operator of 17 ethanol plants nationwide said Monday that it had a loss of $16.4 million, or 41 cents per share. A year earlier, the company had a profit of $8.2 million, or 21 cents a share. Revenue was little-changed at $886.3 million.
U.S. inventories of ethanol, which is produced almost exclusively from distilling corn, approached 24 million barrels early this year, an all-time record. They have remained over 20 million barrels since, according to the U.S. Energy Information Administration.
With the large supply and resulting low selling prices, the Green Plains ethanol production division had second-quarter operating income of $19 million, down by half from a year earlier.
Chief Executive Todd Becker acknowledged in a statement that “ethanol margins were weak,” leading the company to idle production by 40 percent, or 50 million gallons, in June.
“While we have returned to full production, we will remain disciplined in our response to supply-demand imbalances,” Becker said.
Shares of Green Plains on Tuesday fell 85 cents, or 4.3 percent, to $18.90 each in Nasdaq trading. The shares have fallen about 16 percent in the past year after the market was flooded with ethanol made from cheap corn, courtesy of record U.S. harvests.
“While we’re not happy with the bottom-line results this quarter, our balance sheet remains strong and we will continue to focus on growing and diversifying our business going forward,” Becker said in a statement. “Based on current markets, we expect better performance in the third and fourth quarters and will move quickly to reduce volatility and lock away margins as they expand from here.”