Biox Corp. reports healthy fourth-quarter profits
Vancouver, British Columbia-based biodiesel producer Biox Corp. posted record fourth-quarter profit thanks in large part to favorable federal policy mechanisms in Canada and in the U.S. that helped boost increased sales and production of biodiesel, as well as drive up higher margins.
According to a financial statement filed by Biox, sales revenue increased $15.6 million from $7.3 million the previous quarter in 2012 to $22.98 million in the period ending Sept. 30. The company attributes this increase to a combined increase in sales volume as a result of its “produce and store” strategy, which the company implemented in 2010, as well as higher revenue per liter of biodiesel sold. The company reported a net income of $8.2 million in the quarter compared to suffering a net loss of $2.9 million, citing the recognition of $6.6 million of future income tax assets during the quarter.
According to Kevin Norton, CEO of Biox, this year “was a watershed year for Biox as well as the biodiesel market in North America,” he said.
The company reported producing 15.9 million liters (4.2 million gallons) of methyl esters in the quarter compared to 15.3 million liters the same quarter a year ago. In its quarterly statement, the company said that volume requirements prescribed under RFS2 in the U.S. have had a positive effect on the pricing and sales of its biodiesel, particularly with the rise in the value of RINs, which traded at $1.30 as of Dec. 6, according to Biox.
“Demand in the U.S. market for biodiesel is driving strong sales at Biox as U.S. refineries and importers respond to the implementation of mandated minimum volumes of biodiesel under the RFS2 policy,” Norton said. “RFS2 has driven a repricing of biodiesel, from a value based on the cost of petroleum diesel prior to the mandates, to a value based on the actual production costs plus a margin. While we anticipate fluctuations in pricing and costs in the commodity market in which we operate, we are confident that as a low-cost producer we can compete effectively in a market that is legislated to grow in 2012 and 2013.”
As such, Biox intends to proceed with its planned expansion for a second production facility, which is expected to be located in the U.S. and will be larger than its existing 60 MMly (15.9 MMgy) plant in Hamilton, Ontario. According to the quarterly statement, the company is finalizing definitive agreements with the owner of the site for the land lease, long-term tank rentals, terminal services and other infrastructure requirements. Biox anticipates completion of the proposed project for commissioning to be December 2013.
While Biox is Canada’s largest biodiesel producer, the majority of its biodiesel is sold in the U.S. market. The implementation of Canada’s B2 mandate, which went into effect in July, “significantly increases the accessible market for Biox’s product in Canada,” the company stated.