VERBIO's Q1'26/27 EBITDA rose nearly fivefold yoy to € 76.1m, beating our estimate by 24% and consensus by 14% (eNuW: € 61.5m, eCons: € 66.6m). EBITDA rose 10% qoq excluding the € 19.1m Q4 GHG quota inventory valuation benefit. FCF turned positive at € 13.5m (Q1'25/26: € -37.8m), helping reduce net debt to € 83.1m from € 91.5m at FY-end.
Biodiesel drove the beat, with margins still strong at the start of Q2. EBITDA more than doubled yoy to € 51.2m (+42% vs eNuW) and rose € 18.4m qoq on broadly flat sales volumes. Market spreads recovered from their Q4 lows, while favourable feedstock purchases lifted realised margins above the benchmark.
Bioethanol/Biomethane EBITDA recovered to € 19.7m from € -9.5m a year earlier, 24% below eNuW. The shortfall largely reflected temporarily lower US production and lower sales of third-party products. EBITDA fell € 16.2m qoq on a comparable basis as European ethanol spreads normalised. The US production issues have been resolved, with utilisation back at 60-70% in Nevada and c. 70% at South Bend. Other EBITDA reached € 5.2m (eNuW: € -0.4m), helped by commodity forwards.
VERBIO now expects FY26/27 EBITDA at the upper end of its € 210-250m guidance range (previous eNuW: € 230m, eCons: € 245m), supported by the Q1 beat and expectations of strong biodiesel spreads through calendar year-end (eNuW: c. € 300/t). US ethanol spreads have narrowed from c. US$ 100/t to US$ 40-60/t (eNuW), with higher corn oil and DDGS prices partly offsetting the pressure on integrated margins. Stronger global ethanol demand could support US spreads later in the year.
FY26/27 guidance excludes potential benefits from US 45Z tax credits. Management now expects final rules in December. The programme runs through 2029, with potential retroactive claims dating back to 2025. At South Bend, VERBIO plans to replace natural gas in its boilers with biogas from ethanol stillage, lowering the carbon intensity of its ethanol and potentially increasing the credit per gallon. At the CMD, management illustrated theoretical gross annual credits of US$ 13-130m at 90% utilisation, depending on carbon intensity and before potential value sharing. We model € 10m of incremental EBITDA from 45Z in each of FY27/28 and FY28/29.
European regulation could support demand for compliant biofuels. As discussed in our latest note on E20, the German and French push for higher ethanol blends could lift demand in an already import-dependent market and support spreads. From January 2027, tighter German anti-fraud rules would allow biofuels with fraudulent sustainability documentation to be excluded from the GHG quota system, favouring compliant suppliers.
We raise our FY26/27 EBITDA estimate by 9% to € 250m (from € 230m), in line with the upper end of guidance, reflecting the Q1 beat and continued strength in biodiesel margins into Q2. We reiterate BUY and retain our € 41 price target, based on the average FY27/28-FY28/29 FCF yield. -Q1 review table on next page-
ISIN: DE000A0JL9W6