ABF in £98m write down on stake in UK bioethanol and animal feed facility

ABF in £98m write down on UK bioethanol and animal feed facility

The dip in crude oil and bioethanol prices along with the weakening euro against sterling is cited as the reason why Associated British Foods (ABF) has decided to take a £98 million ($149m) impairment charge on its share in bioethanol and feed joint venture, Vivergo Fuels, with DuPont and BP.

ABF owns around 47% of Vivergo, the UK’s largest biofuels plant, through its subsidiary AB Sugar.

The facility, located in Hull in northeast England, ferments animal feed grade wheat, supplied under contract by UK growers, and then produces bioethanol and feed from that substrate.

ABF said its results for the 24 weeks ending 28 February will include a non-cash exceptional charge of £98 million as a result of the impairment charge.

A spokesperson for the company told FeedNavigator the bioethanol and feed facility “is running at its rated capacity and is cash generative.”  He said the plant is running in a tough business environment and that ABF is working hard to see it “do its best” under those circumstances.

Bioethanol prices are reported to have declined over the past few months from over 62p to just over 32p per liter, with a significant drop occurring in the past four weeks due to the decline in crude oil prices.

In 2013, Vivergo reported a loss, after taxation, of nearly £50m, with the company blaming the shortfall on a number of design and commissioning challenges at the Hull biorefinery that it said resulted in lower than expected output volumes of bioethanol and animal feed for a period.

That year also saw ABF and joint venture partner, BP, inject a total of £40m in funding to the business, on an equal basis.

Replacement for soy imports?

Vivergo’s process is said to involve the delivery of 1.1 million tons of animal feed wheat annually to generate around 500,000 tons of feed pellets high in protein and fiber.

The producer says the finished feed supports 20% of the UK dairy herd in terms of protein supplementation and can help reduce the UK’s dependence on imported soy products.

“We supply the protein required for 340,000 dairy cows every day, which equates to nearly 20% of the UK dairy herd.  This displaces South American imported feed which has been identified as a food security risk,” said the firm.

AB Agri manages the marketing and distribution of all of Vivergo’s feed products which are sold in dry pelleted, moist meal, and liquid soluble form.

Related News

Capping biofuels from land crops could threaten EU protein production for feed, says farmer and oilseed groups

Capping biofuels from land crops could threaten EU protein production for feed, says farmer and oilseed groups

© istock.com/mikolajn

AB Agri acquires Danish animal nutrition player

New public affairs hire at Vivergo Fuels, De Heus expands Asian team

New public affairs hire at Vivergo Fuels, De Heus expands Asian team

AB Neo launches 'game changing' neonatal animal nutrition technology

AB Neo launches 'game changing' neonatal animal nutrition technology

'We have gained new insights into how xylanases function to optimize their use in poultry diets,' says AB Vista

'We have gained new insights into how xylanases function to optimize their use in poultry diets,' says AB Vista

Related Products

See more related products

Submit a comment

Your comment has been saved

Post a comment

Please note that any information that you supply is protected by our Privacy and Cookie Policy. Access to all documents and request for further information are available to all users at no costs, In order to provide you with this free service, William Reed Business Media SAS does share your information with companies that have content on this site. When you access a document or request further information from this site, your information maybe shared with the owners of that document or information.