Pacific Ethanol: These Boys Sure Know How To Lose Money
Pacific Ethanol, Inc. have reported a net income loss of $54.9 million for the third quarter, ended Sept. 30, a near 1150% increase compared to a loss of "just" $4.8 million during the same period last year. The firm blames the volatile price or corn.
The losses came despite increasing sales volume by 15 million gallons, or 30%, to 65 million gallons, compared to 50 million gallons for the same period in 2007. In addition the company reported a net sales increase to $184.0 million, a 56% increase over $118.1 million during the same period in 2007.
Earlier this month, VeraSun Energy, the largest publicly traded ethanol maker, filed for Chapter 11 bankruptcy protection, citing similar problems to those experienced by Pacific Ethanol, while Greater Ohio Ethanol, Gateway Ethanol and Beatrice Biodiesel have also filed for bankruptcy this year.
If ever you needed a clearer picture of the foolhardy nature of the heavily subsidised ethanol-from-corn business failing to cut the mustard then this is surely it. Despite the tax-breaks, this industry is still built on a pack of cards that simply can't cope with the fluctuations in price of it's raw material. Corn.
Remember too, these losses came with crude reaching $147/barrel and petrol, sorry gas, at the pumps in the US exceeding $4/gallon. Imagine if you will, taking the 45c tax break that ethanol qualifies for off these figures, if that was to suddenly be rescinded. That makes the bottom line for this quarter alone almost $30 million worse!
Shares in Pacific closed at 79 cents last night, they were almost $10 less than a year ago.
The losses came despite increasing sales volume by 15 million gallons, or 30%, to 65 million gallons, compared to 50 million gallons for the same period in 2007. In addition the company reported a net sales increase to $184.0 million, a 56% increase over $118.1 million during the same period in 2007.
Earlier this month, VeraSun Energy, the largest publicly traded ethanol maker, filed for Chapter 11 bankruptcy protection, citing similar problems to those experienced by Pacific Ethanol, while Greater Ohio Ethanol, Gateway Ethanol and Beatrice Biodiesel have also filed for bankruptcy this year.
If ever you needed a clearer picture of the foolhardy nature of the heavily subsidised ethanol-from-corn business failing to cut the mustard then this is surely it. Despite the tax-breaks, this industry is still built on a pack of cards that simply can't cope with the fluctuations in price of it's raw material. Corn.
Remember too, these losses came with crude reaching $147/barrel and petrol, sorry gas, at the pumps in the US exceeding $4/gallon. Imagine if you will, taking the 45c tax break that ethanol qualifies for off these figures, if that was to suddenly be rescinded. That makes the bottom line for this quarter alone almost $30 million worse!
Shares in Pacific closed at 79 cents last night, they were almost $10 less than a year ago.