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BIOGAS NORD to Consolidate
GERMANY - German bioenergy company BIOGAS NORD AG is to start a programme of cost cutting and consolidation after its 2007 results failed to hit their targets.The company, based in Bielefeld, Germany, said it is going to adapt to the changed market conditions for biogas facilities.
As well as looking to the domestic market, BIOGAS NORD is to focus on successful core markets overseas continuing its strategy of internationalisation.
The company will be taking a number of measures to optimise its business processes, and it expects to reduce staff by 15 per cent by the end of the year.
Because of changes to the framework conditions in 2007, last year’s annual results reported a turnover of €31.7 million, compared to €28.7 million the previous year.
There was an overall operating performance of €25.7 million compared to €(30.6) million and an EBIT of almost €-4.0 million compared to €1.35 million. This means that the original goals set for the year have not been reached.
"In 2006 we failed to position our sales activities correctly," said Gerrit Holz, Chief Executive of BIOGAS NORD AG, in an analysis of the preliminary financial result for 2007.
"2008 will be a year of consolidation for us. Further losses of up to €3 million are expected by the middle of the year. After that, the situation will ease considerably. Due to the present situation we expect an EBIT of around €-2.0 million in 2008," explained Chief Financial Officer Matthias Kubat.
"We are currently implementing a strict cost-cutting programme in areas that are not relevant to growth. If necessary, this will be accompanied by the introduction of shortened working hours. At the same time, we have invested in the establishment of strategic sales activities. We are also optimising our process workflows in consultation with industrial coaches experienced in this sector. Overall, this makes us confident that we can again achieve strong growth in 2009 and return to profit."
The disappointing figures for turnover and operating result are also due to factors that have burdened the whole German biogas market in equal measure, the company said.
The ongoing discussions regarding the amendment of the Renewable Energy Law (Erneuerbare-Energien-Gesetz - EEG), a doubling of substrate prices in recent years and the current debate about the use of vegetable raw materials for energy generation have all led to customers, investors and banks adopting a cautious wait-and-see attitude.
Overseas orders have also been delayed and/or booked into the current year.
"At the moment, we are simultaneously faced with two problems: We have to wait for new EEG directives in Germany and most of the overseas markets are only just becoming established. The contributions to the balance sheet made by overseas operations in 2008 cannot fully compensate for the losses that we will incur in Germany," said Mr Kubat.
"The statutory framework conditions, however, will improve considerably in 2009, with the amended EEG coming into force and thus providing our customers with a more secure foundation for investments in our products," said Chief Executive Gerrit Holz.
BIOGAS NORD expects significantly greater opportunities for improved growth in 2009.
This year, BIOGAS NORD will prepare itself for such upcoming developments by adapting the structure of the business.
In addition to implementing consolidation measures and increasing the cost-effectiveness of its business, BIOGAS NORD will exploit the opportunities offered in successful core markets overseas. In Europe, the company will concentrate on Spain, Italy, England and Poland without, however, completely ignoring other markets.
As a result of this focus, several planning orders have been received from Spain in recent weeks. The company has also entered into partnership with a local business in Italy. The first projects there have already reached the realisation phase.
"We are very confident that the measures we have taken at BIOGAS NORD provide the necessary change in course and that the coming year will see renewed growth as a result. The German domestic market will continue to be important for BIOGAS NORD. In addition, the triumphant international advance of the multitalented biogas will be unstoppable and BIOGAS NORD will play its part, being one of the few global players in the industry," added Mr Holz.
TheBioenergySite News Desk
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