Sales – and losses – increase at Pacific Ethanol

SACRAMENTO
November 10, 2008 5:47am

Pacific Ethanol Inc. (NASDAQ: PEIX)says it posted a net loss of just under $54.9 million or 98 cents per diluted share in its third quarter ended Sept. 30.

The ethanol maker says net sales were more than $183 million.

In the third quarter last year, Pacific Ethanol lost just under $5.9 million or 15 cents per diluted share on sales of just over $118 million.

This year’s third quarter’s increase in net sales is primarily due to a substantial increase in sales volume, coupled with higher average sales prices, the company says.

Sales volume increased by 15 million gallons, or 30 percent, to 65 million gallons, compared to 50 million gallons for the same period in 2007.

The average sales price of ethanol increased by 34 cents per gallon, or 16 percent, to $2.45 per gallon compared to an average sales price of $2.11 per gallon in the same period in 2007.

Offsetting the higher sales price was the high cost of the corn used to make ethanol.

Average corn prices increased 54 percent for the three months ended Sept. 30, as compared to the same period in 2007.

The quarterly loss includes a non-cash asset impairment of $26.6 million associated with the company’s suspended Imperial Valley project, which represents the net of $43.8 million in property and equipment and $17.2 million in construction-related liabilities.

During the third quarter, Pacific Ethanol completed its goal of reaching 220 million gallons per year of capacity by completing construction of its 60 million gallon plant in Stockton.

"We saw unprecedented volatility in the corn and ethanol markets during the quarter and are disappointed with the resulting impact on margins,” says Neil Koehler, president and CEO. “With the recent election results, we expect continued strong support for the Renewable Fuels Standard and the economic development, energy independence and carbon dioxide reductions that ethanol provides."