By Steve Gelsi, MarketWatch
Last update: 4:36 p.m. EDT March 12, 2008
NEW YORK (MarketWatch) -- VeraSun Energy Corp.'s fourth-quarter net profit fell 81% in the face of lower ethanol prices, capacity expansion and higher corn costs, even as revenue more than doubled, the biofuels maker reported Wednesday.
The Brookings, S.D.-based company (VSEverasun energy corp com
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VSE) said income dropped to $4 million, or 4 cents a share, down from $21.4 million, or 27 cents, earned in the year-earlier fourth quarter. Shares outstanding rose 18% to 95 million.
Quarterly revenue skyrocketed, reaching $312.3 million from the prior year's $146.5 million.
Analysts surveyed by Thomson Financial had forecast a loss of 3 cents a share as well as revenue of $298 million, on average.
Shares of VeraSun rose 4.2% to close at $6.96 on Wednesday.
In the final three months of 2007, the company sold 134.4 million gallons of ethanol, more than twice the amount sold a year earlier, but the price per gallon dropped 14%, to $1.87 a gallon from $2.17 a gallon, VeraSun said.
Corn prices in the fourth quarter averaged $3.81 a bushel, up from $3.23 a bushel, according to market sources.
The company markets E85, a blend of 85% ethanol and 15% gasoline for use in flexible-fuel vehicles, to fuel retailers.
Ethanol production increased by 82.5 million gallons, or 138%, as a result of capacity added via three new plants in the past year, the company said.
Aside from the three plants opened during 2007, VeraSun noted that it's kicked off construction on facilities in Welcome, Minn., and Hartley, Iowa, and expects to begin start-up operations at both plants by the end of the second quarter. In addition, the company expects to start up its Bloomingburg, Ohio, plant by the end of the first quarter.
Under new Renewable Fuels Standards passed by Congress, the content of U.S. gasoline will carry a larger percentage of ethanol in a move to reduce dependence on imported oil.
Against this backdrop, VeraSun announced plans last year to buy US Bioenergy in a move to extend its lead over Archer Daniels Midland ( as the largest ethanol producer in the U.S.
The merger has received a regulatory OK and is expected to close by the end of the month.
US Bioenergy announced Tuesday that production has begun from its Marion, S.D., facility.
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