Verbio Se

And thanks for joining the Verveo Q1 Fiske 2425 earnings call. I'm very honored to have with me the management of Verbio SE, Mr. Klaus Lautes, the CEO and the head of MS Relations, Alina Köhler, who will both be presenting the results today. The presentation will be followed by a question and answer session. Please be aware, sales site analysts will be able to ask questions by using their microphones, who will give you some further instructions at the end of the presentation. All other participants, please use the chat box in the lower right-hand corner of the system in order for your question to be considered please be kind enough to supply your company name and your own full name for us to qualify the question thank you so much i'm looking forward now to interesting insights from mr sauta and mr la and hand over the presentation to you thank you very much mr nass

so good afternoon everyone and welcome to today's earnings call i'm here with alina köhler our head of investor relations it's great to have all of you join us on the call we'll cover our first quarter results for the months july through september after that as already mentioned we will have time for questions Our current performance is not satisfactory, and we will discuss the causes of this shortly. But let's keep our attention on the big picture first. The shift to a green economy is essential for the world's future. Even big oil urges Mr. Trump to keep the IRA. their green investments remain viable. You've also heard about the big transaction three weeks ago, which is a strong signal of confidence in the European biofuels market and its returns. While the journey will not be linear, we are operating in a growth sector and Verbio is in a prime position to capitalize on them. So now let's look on the figures for Q1. On a positive side, our production volumes increased year over year, as you can see in the chart on the far left. The increase in ethanol volumes, the light green bars, was driven by better utilization in all regions, including small volumes at our Nevada plant in Iowa. Our RNG production volumes also increased. Yet, our EBITDA declined strongly to minus 6.6 million euro. Hence, the challenging market conditions are very clearly visible in our first quarter figures. Our net debt after our first quarter stood at 63 million Euro as we continued to invest into our key projects. These include mainly South Bend Ethanol, the plant in Indiana, and our plant for speciality chemicals in Germany. We continue to invest. But we proceed with caution and keep our focus on our balance sheet strength. The equity ratio was 65% and remained largely stable. As I had already mentioned with our Q4 figures, The investment tax credit related to the IRA for our RNG facility in Nevada, which we successfully sold in Q4, impacts our equity ratio negatively as it is accounted for as an investment grant and hence increases the liability. Let me now hand over to Alina to give you a bit more details on the figures. Alina, please take over.

Thank you, Klaus, and also good afternoon from my side. On this slide, you visualize the key drivers that impacted our EVTA swing from Q1 last year to Q1 this year, left to right. As you can see, what's really driving the decline is the gross margin. And that's mostly coming down due to the decrease in sales pricing, as well as the challenging GHG quota market. And this has actually affected both segments, the biodiesel segment and the bioethanol and biomethane segment. In Q1 last year, we actually still benefited from attractive locked in GHG credits. So that's a tough comparison for us, of course. Also, and that's something you can see right next to the gross margin decline, the effects and the commodity forward contracts impacted our results negatively. As a result, our earnings of the European activities were not sufficient to cover the costs from our North American growth and deburs. But I'm really happy to report that in North America, we actually have shown a better performance compared to the previous year, which is thanks to a better utilization and lower spreads, despite lower spreads, sorry, as you will come to find out when we talk about markets a bit later on. But let's now go to the more detailed segment split. You are probably familiar with this chart, you've seen it before, and it actually shows the change in composition of our EBTA and compares also the last quarter with this year's quarter. You can see that the decline in both segments has been very similar. However, the decline in the biodiesel segment was purely driven by the gross margin, whereas the bioethanol decline was driven by the before-mentioned fixed effects and commodity forward contracts, as well as the gross margin. So now let me move on to the biodiesel segment and give you a bit more detail here. In the biodiesel segment, Verbio generated revenues of close to 200 million, as you can see in the left chart. This came down from about 323 million euros in the quarter last year. And what's really standing out here is that the production volumes and also the sales volumes remained largely stable. So the decline and the revenue trend was purely driven by lower biodiesel prices. but also lower GHG quota sales. And as we have already also mentioned in our Q4 and Q3 call in the last financial year, Canada has operated through processing contracts from December 2023 onwards, which essentially means that revenues and material costs are being reduced. But on EBITDA, there's no change to that. So clearly when we now turn to the right chart on the slide, lower spreads and lower GHG quota prices had a negative impact on the results in comparison with Q1 last year. And as I mentioned, the market spreads came down and you can see that here depicted in the left chart. that the market spread is the price difference between biodiesel price and the rapeseed oil price per ton of biodiesel. And it decreased during the third quarter compared to last year. And this is actually reflected by the dark green line, which reflects the current financial year and the lighter green line reflects the previous financial year. In the chart on the right, you can see that these declines and spreads was driven by the lower biodiesel prices. But what also stands out is that both the biodiesel price and the ratio oil price are currently on the rise, driven by the veg oil complex and primarily the palm oil actually. And that's really good news now for our second quarter because in a rising price environment, That usually works in our favor, considering that we buy our feedstock two to three months in advance. But now let me give you a bit more color on the biomethane and the bioethanol segment in our first quarter here. So our sales remain largely stable at 160 million euros compared to last year, even though production volumes increased, as you can also see. Revenues is depicted in the bar on the far left, whereas production volumes for RNG and bioethanol are depicted right next to it. The volume increase did not help sales, and that is because, again, the lower bioethanol prices and also GHG prices. These lower sales prices, and only marginally lower feedstock prices fully fed through to the bottom line, which was additionally impacted, and I mentioned that before, by the FX effects and the change in value of commodity forward contracts. So that in the end, in the bioethanol and biomethane segment, we actually reported a negative 21.5 million EBITDA. By the way, the FX effect and the open commodity forward context should actually contribute positively in Q2 as both the dollar and the ethanol prices are currently appreciating. And speaking of ethanol prices, let's have a look at the market developments here. The spreads, again, shown on the left side of the slide, were declining towards the end of the quarter. The decline was specifically driven by lower biorefinal prices. And while they were at a low level, also the lead prices were at the low level. And they have just come up towards the end of the quarter, as you can see in the dark green line, which is driven by US corn, actually. And we'll look at that in a second. And I already mentioned that the bioethanol prices came down. That was actually majorly driven by lower stocks in Europe. But now I mentioned it, we're moving on to the US, which we have incorporated here for the first time. As I said, corn is the price maker right now, and the good crop in the United States keeps the corn level low, as you can see in the right chart. We are currently speaking about €150 per tonne of corn or €450, as you can see in the slide, for one tonne of ethanol for the corn that you need for that. However, in the United States, bioethanol prices also came down considering that producers are maximising their production. Also, what can be seen very well on this slide is that if you now look at the chart on the left side, we really experienced seasonality in the United States. We've talked about the driver season in the past, and you can see that in the winter months, usually the margin is very low, whereas in the summer months, the margin is coming up again. So now I hand back to Klaus, who will give you an update on the GHG quota and what's happening there.