VERBIO reported strong Q4 and FY25/26 results, broadly in line with its preliminary figures and our estimates. Q4 EBITDA reached € 88.2m, compared with a loss of € 8.2m in Q4 FY24/25 and EBITDA of € 60.2m in Q3, bringing FY EBITDA to € 193.9m from € 14.2m a year earlier. Bioethanol/Biomethane division was the largest Q4 contributor, generating € 55.0m of EBITDA versus a € 26.3m loss a year ago. The segment benefited from strong European ethanol spreads (eNuW: c. € 380/t versus c. € 100/t a year earlier), higher GHG quota prices (up more than 300% yoy to c. € 400/t) and improving utilisation in the US. Biodiesel EBITDA rose 58% yoy to € 32.8m. Higher GHG quota prices were a key driver, while increased volumes and rapeseed oil purchased in advance at favourable prices helped VERBIO improve its realised margin despite a much weaker market spread (eNuW: c. € 10/t versus c. € 90/t in Q4 FY24/25).
The midpoint of FY26/27 guidance is fully in line with our forecast. VERBIO expects EBITDA of € 210-250m, implying reported growth of 8-29% yoy. Management expects higher US production, rising biomethane volumes and a greater contribution from GHG quotas to drive growth (eNuW: c. € 60m after adjusting for extraordinary quota volumes in FY25/26). These gains should be partly offset by a slight decline in Biodiesel earnings and some easing in European ethanol spreads.
The underlying growth implied by guidance is stronger than the reported comparison suggests. FY25/26 EBITDA included a € 19m reversal of write-downs on GHG quotas generated in calendar 2024. Excluding this item, FY26/27 guidance implies growth of approximately 20-43%. Separately, quotas usable only for the 2027 obligation year remain on the balance sheet at € 131m, with the majority expected to be realised in FY27/28. On our assumptions, potential proceeds exceed € 220m, providing a significant medium-term cash catalyst.
The return to a dividend highlights the strength of the cash flow recovery. Operating cash flow reached € 165m in FY25/26 and free cash flow amounted to € 78m, allowing net financial debt to fall from € 164m to € 92m. Including lease liabilities, net debt stood at approximately € 128m, or 0.7x EBITDA. Against this backdrop, VERBIO has proposed reinstating its dividend at € 0.20 per share.
The Capital Markets Day on 8 October should provide greater visibility on value beyond the near-term recovery. As discussed in our initiation, we expect further detail on the commercial rollout and medium-term earnings potential of renewable chemicals. We will also look for an update on the Nippon Gases CO2 capture facility at Zörbig, which began operating in September 2025 and remains in ramp-up. At full utilisation, we estimate that its CO2 savings could have a gross value of c. € 30m p.a. The partners are also studying an extension of the cooperation to Schwedt, where we estimate the potential CO2 savings could be roughly four times greater, although the project remains at an early stage. Further clarity on the potential benefit of US Section 45Z tax credits would provide another catalyst. We reiterate BUY with a € 41 PT, based on average FY27/28-FY28/29 FCFY.
ISIN: DE000A0JL9W6
