ABF takes £98m writedown on Vivergo venture
ASSOCIATED BRITISH FOODS (ABF) is to take a £98m hit on its bioethanol joint venture with Vivergo Fuels.
The company said this morning it would write down the value of its investment in Vivergo Fuels due to falling crude oil and bioethanol prices and the further weakening of the euro against sterling.
ABF said the £98m non-cash exceptional charge would be included in its interim results for the 24 weeks to February 28.
Vivergo Fuels owns and operates one of Europe’s largest bioethanol plants
on a brownfield re-development project built on a 25-acre site within the Saltend Chemicals Park near Hull.
A Vivergo Fuels spokesperson said: “We currently face an extremely challenging market caused by a decline in bioethanol prices, a devaluation of the Euro and falling oil prices. In addition, the increase in the blend ratio of bioethanol in gasoline to meet the legislation for renewable transport fuels has developed slower than expected, impacting demand for the bioethanol that we produce.
“Our shareholders remain fully supportive and believe in the importance of bioethanol as a renewable transport fuel that delivers both economic and environmental benefits. We continue to work closely with them, and to focus on the things that are in our control, namely maintaining efficiencies plus safe and effective operations across our business.”
The joint venture between ABF, BP and DuPont produces fuel derived from plants.
The fall in the price of oil is the latest problem to face the joint venture. In October it reported design and commissioning issues at its £350m biorefinery had led to a loss of almost £50m for the firm.
The problems led to lower than expected output volumes of Vivergo’s two commodity products, bioethanol and animal feed.
The Vivergo plant will produce 420m litres of bioethanol (a renewable transport fuel which is added to petrol) a year at full capacity, equivalent to a third of the UK’s current demand.
