VBK.DEVBK.DEXETRA
Loading
Sarah Mallock: Good day, ladies and gentlemen, and a warm welcome to today's earnings call of Verbio SE following the publication of the half year and second quarter figures of the financial year 2025 to 2026. The CEO, Claus Sauter; as well as CFO, Olaf Troeber, will speak in a moment and guide us through the presentation and the results. And after the presentation, we will move on to a Q&A session, which we will be happy to take your questions. And having said this, Mr. Sauter, the stage is yours.
Claus Sauter: Thank you very much, Sarah. Good afternoon, everyone, and thanks for joining our half year and second quarter 2025, 2026 earnings call. Building on the momentum from the first quarter, we delivered a strong first half of the year. Even though we had to work through quite a bit of regulatory noise, the underlying tailwinds are clearly moving in our favor. We are heading in a very positive direction, and we'll keep doing the work that positions us well for what is ahead. As always, we will walk you through the regulatory developments and what they mean for us later in the call. Given Verbio's solid result in the first 6 months, we are now expecting our full year EBITDA to come in at the upper end of our prior guidance range, which was indicated to be at a high double-digit euro million level. With that, I'll hand it over to Olaf to review the financial and operational results. Olaf, the floor is yours.
Olaf Troeber: Well, thanks, Claus, and good afternoon, everyone. As you can see in the chart on the left, our biodiesel output was slightly below the level of the same period last year with 311,000 tonnes in the first half of '25, '26. In Europe, we once again reached a record production volume, which highlights the strong operational stability of our plants. In Canada, we shut production towards the end of the reporting period as planned for the winter. This was a pure commercial decision. Regulatory changes in the U.S. and the protective measures in Canada in response have shifted the seasonal cash flow profile of the plant. Overall, we still expect good full year results. But during the winter months, we will most likely not produce. Ethanol and biomethane production also increased year-over-year to 307,000 tonnes and 672 gigawatt hours, respectively. The increase in production came from the ramp-up of our bioethanol biomethane plant in Nevada and also better uptime at the ethanol plant in South Bend. That more than made up for the lower volumes in Europe due to maintenance. And despite the extreme weather conditions in Iowa, our Nevada plant hit a new production record in December, which was great to see. With overall higher production and sales volumes, Verbio was also able to increase its revenue. This was supported by a renewed rise in demand for greenhouse gas quotas, both in terms of volume and price. Although material costs were also well above the level of the same period last year. The increase was disproportionately lower compared to revenue growth. And this in turn means well, our EBITDA increased mostly thanks to a higher gross margin. Lower operating costs, first, higher other operating income and gains from commodity forward transactions also contributed to the increase in EBITDA. And therefore, on a year-over-year basis, we still felt the impact of lower greenhouse gas premiums in our yearly term contracts which expired end of December last year, but this was more than offset by the recovery in the spot greenhouse gas market prices. And thanks to the improved operating dynamics supported by more attractive market conditions, we saw a year-to-year -- no, sorry, a year-to-date operating cash swing of EUR 21.7 million, bringing operating cash flow to EUR 35.6 million. Meanwhile, CapEx amounted to EUR 47.8 million, resulting in an increase in net debt to EUR 173 million. And we had already flagged that net debt would increase over the course of the year due to our strategic investments. But compared to Q1, net debt already came down substantially from its peak as we have hit the turning point and delivered a positive free cash flow in Q2. Investments itself, they are directed towards the specialty chemical units here in Bitterfeld as well as into the production plant in South Bend, Indiana in the United States. The equity ratio remained at 58.2% and hence at a comfortable level. And now we can ahead, let's take a closer look at the quarterly performance. Our group EBITDA increased both year-over-year and quarter-over-quarter to EUR 30.1 million from EUR 20.8 million in Q2 last year and EUR 15.4 million in the previous quarter. With this, we are finally back in the black also at the earnings per share level. As depicted on this slide, the Bioethanol/Biomethane segment was the main driver behind this movement. Thanks to the stabilization of the greenhouse gas quota market and the attractive ethanol spreads in Europe. Verbio was able to report a positive segment EBITDA in the second quarter of '25, '26 for the first time, the first time in 5 quarters coming in at EUR 5.8 million. Year-over-year, the capacity ramp-up in North America also helped. Now let me give you a bit more color on the segment performance. Here, we are focusing on quarter-over-quarter changes rather than year-over-year. In the Biodiesel segment, production in Europe reached record levels in the second quarter of '25, '26. And in Canada, as I have outlined before, volumes were deliberately scaled back during the reporting period due to changes in the regulatory environment in North America. As a quick refresher, last year's change from the blenders tax credit to a production tax credit in the U.S. along with the lack of guidance has caused many producers to scale back biodiesel production across North America. And such uncertainty has made it harder to run at full rates. During the summer, we have resumed production, thanks to good demand in Canada and our prime location there. In the winter, however, biodiesel use in Canada is very limited, so production naturally comes down. Importantly, with some form of production tax credit in place and solid summer demand further supported by domestic blending requirements, we assume summer margins should be strong enough to make the overall year attractive despite the seasonal slowdown. Now taken together, these developments led to a lower overall production compared to the prior quarter. We produced 144,000 tonnes versus 167,000 tonnes in Q1. And due to this, revenue also decreased in the second quarter of '25-'26. We generated EUR 223.8 million compared with EUR 244.1 million in the previous quarter, as can seen from the chart on the left. Still, our EBITDA in the segment increased to EUR 24.1 million, and this is thanks to higher selling prices in euro compared with only a moderate rise in material costs. For some market context now, let's take a look at the reference charts. I think most of you are familiar with these charts already, but I will still go into the details. These charts illustrate how biodiesel spreads have developed by spread itself. We mean the difference between the biodiesel price and the rapeseed oil price. While the charts actually don't capture our specific sourcing strategy, they still give you a useful snapshot of the broader market trends. And to remind you, we typically buy our rapeseed oil 2 to 3 months in advance. Yes, that's actually the difference. So now with respect to the spreads towards the end of the year, you can see the spread picking up, but came back again a bit in the last few weeks. And after the cabinet decision on the 10th of -- yes, it was the 10th of December '25, confirmed that a double counting would end going forward. Market players actually use the remaining window to increase the share of advanced biodiesel still eligible for double counting. And this in turn actually required more rapeseed oil-based biodiesel or RME or rapeseed oil methyl ester because advanced biodiesel itself has a vehicle cold flow properties and therefore, needs RME to meet winter great specs. But the seasonal push supported RME margins while rapeseed oil prices came off slightly. Next. Moving on to the bioethanol and biomethane segment. We recorded an increase in revenues to EUR 228 million, which is actually, again, a new quarterly record. Revenues are shown by the green bar on the left-hand side of the left chart. The main drivers were the recovery of the greenhouse gas quota market, higher sales volume in bioethanol, biomethane and increased selling prices in Europe. Lower selling prices in North America had an offsetting effect. Meanwhile, bioethanol and biomethane production volumes were roughly flat compared with the previous quarter, mainly due to maintenance work in Europe, not U.S., to be clear, in Europe. Overall, bioethanol utilization stood at 76.6% and biomethane utilization at 67.9%. Well, thanks to the stabilization of the greenhouse gas quota market and improvement in ethanol spreads in Europe, we were able to report an EBITDA increase of EUR 15.4 million in the second quarter of '25-'26 compared with the previous quarter. And -- just as we discussed on our previous call, the margins between ethanol price and feedstock costs had widened just for a few weeks at the beginning of the quarter. And here again, next slide, also take a look at the reference graphs. They show how ethanol market spreads have developed over time. As with biodiesel, they don't reflect our exact purchasing of feedstock strategy -- yes, they don't reflect our purchasing feedstock strategy, but they do give a good indication of the broader market environment. On the slide, we use wheat as a reference feedstock, but production-wise, we also can use corn, rye or triticale, actually essentially anything that's cost competitive or offers better CI values. Now looking at the price chart on the right, ethanol prices increased towards the end of the first quarter and into the beginning of the second. While wheat prices is slightly, thanks to a strong harvest, in October and November, spot ethanol prices traded above EUR 1,000 per tonne, reflecting some short-term imbalances, but also support from tight supply due to maintenance at European plants, steady demand and lower import volumes. And as you might recall, the discussions we had in Q1 regarding future margin spread development. Looking back, I believe sticking with a conservative margin spread approach turned out to be smart. Now looking ahead to '26, ethanol fundamentals remain positive and margins have increased in recent weeks. Additional support comes from the RED III transposition in the Netherlands, which now restricts the use of denatured ethanol. So good feedstock availability in countries such as France also supports production. Now moving from Europe to the U.S. In the U.S., ethanol margins were strong in late summer, helped by low inventories, lower production and solid export demand. As we move into the fall and our Q2 margins came down a bit, which is actually normal for the season. But the margins were still higher than in '24, thanks to strong industry fundamentals. As a result, production was high for this time of the year and inventories started to build up. Stocks are still below last year's levels and near the lower end of the usual seasonal range. Now looking ahead, margins are supported by these tight inventories and the U.S. corn crop, which is helping keep feedstock costs under control. And on the top of that, domestic blending demand is still healthy and ethanol exports as well, which reached record levels last year and expected to grow again in '26. Now going back to Germany. Let's turn to the development of the greenhouse gas quota, which, as mentioned earlier, is a key earnings driver, both directly and indirectly as it also reflects the overall health of the biofuel markets. Let me briefly explain why the greenhouse gas quota actually is for anyone who may be joining us for the first time here in this call. In Germany, the greenhouse gas quota system requires full suppliers -- In Germany -- give me a second. In Germany, the greenhouse gas quota system requires full supplies in the transport sector to reduce the greenhouse gas emissions of the fuel they sell. And Germany is one of the largest biofuel markets in Europe. So this system has a big impact on the market. Fuel suppliers can meet their targets in 2 main ways. They can blend more renewable fuels into their products or they can buy greenhouse gas reduction credits from low carbon fuel producers like Verbio. So how does it work? In our case, we supply biomethane in the transport sector, thereby generating emission reductions that fuel suppliers then can use to meet their own legal obligations. And the price of the greenhouse gas quota is driven by supply and demand for these emission reductions. Fraud cases in the market artificially increased the supply of reductions in the past, which caused prices actually to collapse. As a result, at the end of '24, a political decision was made here in Germany to suspend the use of surplus quotas in the obligation years '25 and '26 last year and this calendar year. The surplus buildup until the end of '24 will remain in place, but they can only be used again starting in '27. And this initially pushed prices lower, but '25 prices began to recover as the market adjusted to the suspension. And now the transposition of the RED III into national law provides an opportunity to implement tighter compliance rules and additional controls to prevent fraud going forward. Since the first draft was published at the end of June, ministerial agreement has confirmed that double counting will be eliminated. And this is a positive development, especially combined with the restriction of [ trust ] protection. Claus will explain the removal of the double counting and its impacts in a bit more detail later on. So that brings me to a recap of what has happened during the quarter under review. The cabinet finally adopted a draft in December '25 after several delays that had weighed on prices. This had been a bit late than -- this was actually a little bit later than we had initially hoped. But overall, the sector is finally moving into the right direction. The Bundesrat has now already discussed the legislation and the final parliamentary debate in the Bundesrat is scheduled for March this year. Once passed, the law is expected to enter into force retroactively from 1st of January 2026, 1st of January this year. Now with this, let me turn to our guidance, while the strong bioethanol market has worked in favor, which allows us to specify our EBITDA guidance to the upper end of the previous expected range. The range -- the previous range has been communicated to be in the high double-digit million amount. And -- we expect a lot of questions regarding this. So to be clear, the guidance reflects a prudent expectations, our prudent expectations. The improved results and lower investments compared to the previous year are expected to lead to a moderate increase in free cash flow and reduction in net financial debt year-over-year. CapEx continues to be under tight control as we have again demonstrated this quarter. A key part of our CapEx right now is the construction of our ethanolysis plant in our Bitterfeld site. We are fully on track. Starting in the second half of '26, we will produce the first renewable molecules for the chemical industry. So we are fully on track with our construction here in Bitterfeld. These specialty chemicals are essentially building blocks for [ detergents ], cleaning products, high-performance lubricants and plastics. And with this project, we are helping drive the shift from fossil-based to renewable raw materials in the chemical sector. Well, and now I will hand back to Claus, who will provide further insights into the regulatory environment and our broader outlook. Thanks, Claus. Go ahead.
Claus Sauter: Thank you, Olaf. So now about the drivers. We've talked a lot about the end of double counting, and it was important, very important. But we want to explain you what does it finally mean and what is the effect because some people were asking us, is this not negative for Verbio. So we have conventional biofuels and we have advanced fuels. And we all know that most of these advanced fuels were not advanced fuels. These were conventional fuels with a different passport. So pre -2026, so in 2025, the price per ton of CO2 saving, the price was around EUR 200. So for our conventional fuel for 1 ton of CO2 saving, we got EUR 200. Now with the new legislation coming, prices doubled, went up to EUR 400. So CO2 savings coming from conventional fuels will now create the double price. And finally, that is 70%, 80% of our production. So that was the most important part for us because we were suffering under that fraud because we must be honest. The fraud will continue at least at the beginning. So for the advanced fuels, advanced fuels are creating more CO2 savings because of double counting. But it didn't -- or it doesn't mean that they are just getting double price. It was even more. If we are producing biodiesel from rapeseed oil, 1 ton of biodiesel is creating 2 tons of CO2 savings. If we are making biodiesel from a residue, an advanced biofuel, this biofuel was creating in 2025, 5 tons of CO2 savings. So that is important that this is over because finally, that was the economic driver. The idea to give a better greenhouse gas savings with double counting to advanced biofuels was at least at the very beginning, a good idea to improve and increase the volumes. But finally, it didn't work, and I don't want to recall all these reasons. So this is the individual pricing, but what does it mean per ton of product. So that is now the real effect, and it shows why our economics, especially now in 2026 will further improve. So for the amount of greenhouse gas savings per ton of biofuel, before this was per ton of CO2 savings. Now we are talking per ton of biofuel and in this case, per ton of biodiesel. So the increase in 2025 for the amount of CO2 savings per ton of biodiesel, the money we received was about EUR 456. Now with the new legislation and the higher prices, the premium is EUR 912. For advanced, it's -- so it doubled for conventional. For advanced, it's still more because you are calculating with a [ 0 ] amount of greenhouse gas volume on the feedstock, but there is no more double counting. So at a price of EUR 200 per tonne of CO2, the contribution for the product for the tonne of advanced biofuel was EUR 1,168 until the end of 2025. And now with the higher price per ton of CO2 saving is 1,244, still more attractive. But before the gap was between EUR 1,168 and EUR 456. And now it is between EUR 1,244 and EUR 912. So that shows the real impact and the return to a level playing field. But with the fact that the double counting is going away, we also have to adjust our CO2 handprint. But on this, I will come later. So we also put this chart -- the next one, this chart in our presentation, which shows the difference between -- the different biodiesel products. So what Verbio is producing is rapeseed machine, which is same minus 10. So that is the pricing, what we have seen from January 2023 until January 2026. So price was more or less stable. And the blue line is the price for HVO, hydrated vegetable oil, same feedstock, other process. And also here, you can see the fraud because in January 2023, the differential between our FAME minus 10, our rapeseed methyl ester and HVO based on -- so both residue based was more than $1,000 per metric ton, so much more expensive. And this differential between April '24 -- and April or July '25 went down to $500, $600. So it came down very much, and that brought our product under pressure. But at least most of this HVO was not advanced. Most of it was palm oil or palm oil derivatives. And now with the new legislation, what you can see now since October, since it is clear that the pricing will change that the gap went out again. Why is this important? Because it shows -- we will need in 2026 and 2027 in Germany and in most of the European countries, we will need HVO to fulfill the biofuel targets. The cheapest and most efficient solution is still biodiesel first generation. That's the cheapest product. But there is a blending wall. So HVO prices beyond the blending wall will set the target per ton of CO2 savings. So our biodiesel for the biodiesel business, the volumes and the blending wall will be covered, but everything what is beyond, and this is important for the other products like ethanol and especially renewable natural gas and finally, the CO2 price. So coming to 2026 and 2027, there is a high probability that the price of EUR 400 per tonne of CO2 savings will not be enough. Prices might go higher, but this we will see during the coming months. But what I want to tell you is there is a strong indication that it needs to go further up because the price setting product for the ton of CO2 savings will be HVO. And with the removal of the double counting, as I said, we are back on a level playing field. So now let's come to, as I said, the adjustment of -- or update of our CO2 footprint. So the handprint on that slide shows the CO2 saving potential of all major products we produce and trade globally calculated under the German regulatory framework, which until now included the ability to double count advanced biofuel. Under the old rules, we reached 5.5 million tonnes of CO2 savings in 2024, 2025 with a target of 8 million by 2026, 2027. Adjusted for no double counting, the comparable 2024, 2025 figure would be 4.2 million tonnes. So with the new rules, we now expect 4.7 million tonnes by 2027, 2028, driven mostly by the expansion of advanced biofuels in North America and upside comes from carbon sequestration and other emission reduction measures. So we need to adjust our CO2 handprint to the new legislation. So speaking of North America, let me quickly give you also an update on the regulatory developments. But as I said, very briefly, so the trade policy of the U.S. administration supports and supported exports, which is strengthening demand. Then 2, 3 weeks ago, Mr. Trump was in Iowa announcing that now a year-round E15 approval will support domestic blending. Right now, in the U.S., E10 is standard fuel and is limiting the market in the United States. So the message from Mr. Trump is that there will be a year-round E15 approval. And because ethanol in the U.S. is so cheap, that is really interesting for the filling stations to offer a higher blend and make money on ethanol. And the most important part is the new draft of the 45C guidance, which provides greater regulatory clarity. And that's what is behind is the concept of production tax credits related to the carbon intensity. So in the U.S., it's carbon intensity. In Europe, it is greenhouse gas calculation. At the end, it's the same, but there are different models. So related to the carbon intensity, there is a possibility to get up to $1 per gallon of ethanol, which is about $0.30 per liter of ethanol in the United States, which is a lot of money and which will bring the price for ethanol further down. So U.S. ethanol is already the cheapest ethanol in the world. But with the 45C, U.S. ethanol will come down further. And it depends on your production. But if you are getting full contribution from the 45C, a U.S. producer can offer ethanol at $0.20 per liter, which is amazing, which is much, much cheaper than fossil gasoline. And what we expect is that this will further drive the export volumes on certain destinations because with prices like this, it opens up even at crude oil prices at $50 or $60, the so-called voluntary blending because it's just the cheapest fuel. So saying that, let's head into our Q&A session. Thank you very much for listening. And now let's answer your questions. Sarah, please take ahead.
Sarah Mallock: Absolutely. Thank you so much for the presentation, Mr. Sauter and Mr. Troeber. So participant, we're now open for your questions and everybody is invited to post questions in the chat, and I would be happy to read them out for you. And, analysts have the possibility to ask questions in person via the audio line. And having said that, we received the first virtual hands. And the first one is from Mr. Kuhn. So please go ahead and ask your questions.
Michael Kuhn: I'll start with the most obvious one, the guidance. Would use EUR 30 million as a run rate per quarter for the rest of the year? And my impression was that with some maintenance work in the recent quarter, it wasn't like particularly strong. I would already arrive at more than EUR 100 million. So interested in your views on guidance and let's say, how much of a safety cushion is probably reflected in it?
Olaf Troeber: Okay. So well, we did not increase the guidance. We said it during the presentation that we think that is a good first half year. But there is still something with the new regulation under negotiations. We think that it's still not over. So there is space for improvement. But there are also other, let's say, uncertainties, which we wanted to wait that we have clearness. So finally, at the moment, there were also -- you saw the chart of the strong ethanol margins October, November, and then it came down. Right now, ethanol again went up. So there is still some volatility in the market. And let's say we have a cautious approach right now. If the things are developing in the right direction like we expected, then there might be realistic space of some lift up for the guidance, but not before the end of Q3. So right now, I would not say it's a conservative approach. I would say it's a cautious, realistic approach.
Michael Kuhn: Understood. Very clear. Second one on the Nevada plant ramp. I think during the last call, there was some discussion on, let's say, time windows of high utilization widening from like daily operations, weekly and so on and so forth. So maybe you could give us a little more insight on where we stand in the ramp, where we are in terms of utilization and what further, let's say, gradual improvements we should expect for the upcoming weeks and months and quarters?
Claus Sauter: Okay. As I said during the presentation, we have achieved record production in December. In January, you remember that storm. So there was net gas price, which was incredible. Usually, natural gas price is about $3 per MMBtu. And during that week, it went up to $70. And natural gas is still needed to produce ethanol. So that was a difficult situation in January for ethanol. We stopped our ethanol production in Nevada, and we were just producing natural gas and made a margin on that. So January was not to -- through technical issues. It was a market issue and really extreme weather. So what I -- we are clear on our track to have full utilization now in Q4 of our business year, which means during the summertime, we had already 83%, 85% utilization rate. So we are very positive here to be able to manage that. And I think that January was an interesting part as well for us because we were able just to take the opportunity and make money out of this extremely high natural gas prices. But everybody to whom you are talking even in Iowa that this January is 10 days or 8 days were really extraordinary and very, very cold. We had up to minus 40 degrees Celsius there in Nevada. So you can imagine what was going on there. But we are on a good development. And I think you also can see it, Olaf mentioned it, just look how ethanol and natural gas is developing. We were coming from minus 15 in Q2 from the last business year, permanent improving. Now we are back, and this is mainly driven by the U.S. development.
Michael Kuhn: Excellent. And one last question. On the German THG quota, I read in some news letters that there is a discussion to maybe increase from the 16% plan for '27, maybe towards 17.5%, maybe even 18%. What are you hearing out of that discussion? And what would be the, let's say, potential implications of the scenarios currently being discussed?
Claus Sauter: Well, this is exactly what I meant when I said there is space for further improvement. That is just one point. There are 2, 3 points which are very important or important and which will further increase the value of the greenhouse gas volume. So to come back to your specific question, 1% of CO2 saving is about 2 million tonnes, 1% of higher quota is about 2 million tonnes of CO2 savings. So the original number was 15% for 2027, but we all know that in 2027, some volume from 2024, which is frozen will come in. So 1% is really too low. That is our argumentation. And if we are going up to 17.5%, that might be another 1.5%, then we talk about another 3 million to 4 million tonnes of CO2 savings. But this will mainly be absorbed from the frozen volumes in 2024. So what I hear is that there is consent that nobody is saying that what we are asking for here in this specific situation, and we were suffering a long time with this fraud. So nobody is saying that this is unjustified. And therefore, I think the 17.5% or even 18% can be realistic. But we have to wait another few weeks more. But I would say 70%, 80%, I'm sure that it will come.
Sarah Mallock: And then we will move on with the questions from Mr. Hesse. Sir you can commit yourself now.
Constantin Hesse: I've got a few. One of them being, if you can give us a little bit of color in Q2, how much of the recovery in bioethanol, biomethane was driven by the improvement in spot contracts versus the improvement in spreads?
Claus Sauter: This is hard to answer. Olaf, to you? Most of the volume, I would say the lion's share was driven by better ethanol prices and some for sure of the CO2. But most of the CO2 from ethanol was already covered under the existing contracts. So we are talking about, let's say, 30,000 tonnes of free CO2 saving volumes. And now you can see, well, if we are talking about EUR 100 or EUR 80 better price, then it's 30,000. So it's about EUR 2.5. It's not a big jump, EUR 2.5 million, EUR 3 million can be not more. But this is just a rough calculation. You saw it Constantin, you saw it that prices especially accelerated at the end, November, December, which is very, very unusual, which is very unusual because finally, now the oil companies are doing their calculation how much CO2 savings they need for 2025. They look how much gasoline they sold, they look how much gas oil they sold, they make their calculation. And finally, usually, in a normal year, they buy the remaining volume in the first quarter of 2026. But this year is special because everybody knew that double counting will go away and also that there is fraudulent volume still in the market. And if you buy it until the end of 2025, you are not responsible. You can trust in the papers what you get even if you know that it is not true. So [indiscernible] is ending at December 2025. And a lot of people were buying and said, okay, I don't have a risk here. So that was driving the CO2 prices. It is still the same framework like the other years before. So nothing has changed regulatory in Q2, in our Q2, which means Q4 2025. And that was driving the prices. But I also said now that there might be even a better development now in 2026. But right now, they are doing their homework.
Constantin Hesse: That's great color, Claus. That leads me to my second question, which is -- what I'm trying to figure out is where should we expect the negotiations to have gone for the new quota levels in '26 in your year? I mean, I know you obviously don't provide us with a number, but I'm trying to figure out, I mean, quota levels ran all the way up to EUR 500 at the end of last year, and they dropped quite significantly now again at the beginning of the year, I think we're back to about EUR 440. So what I'm trying to figure out is if I look at 2026 calendar year 2026, what is the new quota level that I should be kind of anticipating for the term contracts compared to last year? I think last year, you were somewhere in the low 300s. If we were to use this new quota price, would today -- would 2026 be somewhere around the low 400s?
Claus Sauter: We are not providing here information like this, just for the logic. The contracts are negotiated between October, November, December. And most of the contracts last year came in very late because everybody was looking what is the final regulation. So if the market shows EUR 400, EUR 450, that will be also reflected in the contracts, maybe a little bit lower, but that is always the level. And that was the difficult situation at the end of 2024. CO2 prices came down below EUR 100. And under the circumstances, because they were frozen and under these circumstances, we had to negotiate the contracts for 2025. And I can tell you our CO2 prices for the 2025 contracts were even lower, okay? So that is the level how you can calculate without disclosing any details of our contracts. So that was the level at that time for the new contracts for everybody. So now the interesting thing is how efficient you are in your processes. And I said roughly with 1 ton of biodiesel, we are producing 2 tons of CO2 savings. But it can be 1.8 and it can be 2.4. So that is the specific value of a company, how you are able really to get as much CO2 savings out of 1 tonne of your product as possible. And in this case, Verbio is very, very efficient.
Constantin Hesse: Understood. Then if I may, just on the guidance, following up from Michael's question, Olaf to you. When I look at the guidance for the remainder of the year now, you clearly are obviously considering the new contract levels for CO2. So we have recently -- so bioethanol prices dropped significantly again in December. We started seeing a bit of a recovery now in January, February. Is this new guidance taking a more conservative view on bioethanol prices? Or are you already pricing in that slight recovery that we've seen in early '26?
Olaf Troeber: Well, Constantin, don't stress me on the guidance. I think I said enough on it. You know when we make -- you can answer your question yourself. You know when we made the guidance, you know where the CO2 prices were at that time. But it's -- there is still -- the regulation is not -- has not passed the parliament. So I think right now is really the wrong timing to do already something, give us a few more weeks once we have clearance. And even the impact that it might go from 16% to 17.5% or 18% for 2027 will impact the market. Because with 17.5% and even 18% for 2027, that might be a challenge to fulfill this target. Okay? The molecules will be there. But as I said, the price setting product for the ton of CO2 saving is then for sure, HVO and with a price differential to normal biodiesel with $800 to $1,000 per metric ton, you see what that means for the CO2 savings. So nothing more to the guidance. We will come back in a reasonable time if it is necessary.
Constantin Hesse: Sounds good. Fair enough. Last two questions then. Just if we could have a little bit of an idea of what the contribution is that you expect from the ethanolysis plant. And obviously, I think in '26, it's very negligible. But in '27, if we could have an idea of what kind of contribution you expect from that? And at what level of EBITDA would you feel comfortable again to start investing CapEx to increase your biomethane production again? Those are the two questions.
Olaf Troeber: This is very interesting. So first of all, we are going to start up the ethanol uses in the new business year beginning July. I don't know what will be really the contribution because this ethanolysis gives us new additional optionality. So right now, I think there is also a change in the view in Europe between this discussion first and second generation. The cheapest way to fulfill decarbonization in transport is first-generation biofuel. That's it. And you know that Germany has still a lower target than what is allowed in Europe. We can do 7% volume. There is a cap and Germany has 4.4%. They wanted to decrease it further, but no way, maybe we are also able to bring it up again. So -- but that product is the feedstock for ethanolysis. So it is a new process. It will be a new market. We need to develop during 2027. So don't expect an additional EBITDA contribution for the next business year. That is something new. It is not -- this market will be not dependent on the transport sector. It's a voluntary market. We want to see how much people are really willing to pay for the green premium. And to the whole market, which is necessary for Germany, this is just a very tiny, tiny, tiny production. But I used to compare it with when we started up with biodiesel 25 years ago in 2000. So it was a new product. We had to convince the whole years to use that biodiesel. We had no approvals from the truck producers. Ethanolysis is a promising, interesting new segment. And right now, I think when I recall all the ideas, what big players had with renewable chemicals, I think it's just Verbio which remained to follow up that way. But don't expect an additional contribution also for the next business year. We have to develop this market. We have to develop the process. We have to improve it, go through the Phillips curve, bring it into the market. But once it is established, it will create completely new and a different stability to Verbio than we had in the past. The dependence on sometimes crazy developments in the transport sector with fraud, with, I don't know, some sometimes stupid regulation will go away. That's a new pillar in the development for Verbio, but it will take time. Thank you very much for your questions. Continue.
Sarah Mallock: Yes. We have two questions in the chat. We do not want to miss even if we're a bit about time. But Mr. Tim, he would like to know, since we heard a lot about the U.S. and EU, my question is, are there any updates in India, especially with the GAIL deal? And another question from Mr. Lida is, can you give an update on India and insights into your global trading activities?
Claus Sauter: Okay. First, India, right now, no, I'm sorry, no new news, except that -- but this you all know that now India and Europe is coming closer in a lot of things. And one of our ideas in India was that we wanted to have the opportunity to monetize greenhouse gas savings also in Europe. So that's now becoming more realistic with this trade deal, which is promising. And to develop new projects with GAIL, we have also now another partner, which is a Japanese gas company. So it's going on, but nothing which can be disclosed at that point. I also can tell you that the Indian government is preparing a new big package for -- they call it CBG compressed biogas in India. Indian government did a great story with ethanol. You know that India has now E20. So 20% ethanol is the regular fuel in India, and they want to repeat this positive development with CBG. So a big package will be prepared. It will somehow be disclosed in summer, July, August. And that will lift up our activities in India to a new level. But please, I'm sorry, but give me a little bit more time. So Sarah, what was the other question? The first one about the U.S.?
Sarah Mallock: No, the first one was about India, especially GAIL.
Claus Sauter: Okay. And the second point was about global trading.
Sarah Mallock: Yes.
Claus Sauter: So yes, I would say 2 years ago, Verbio was 99% pure producer. And since that time, we established more trading activities in North America and also trading activities in -- for Europe in Geneva. So the development is positive. It's not only the impact with trading volumes, what we are doing. It is also stabilizing our business because with our team in Geneva, we increased our supply market. So we are now also supplying product into France, into Belgium. So it widens up our physical or our ability delivering physical molecules to the market. So the contribution is not only on the pure trading side. And the overall volumes, what we are now doing from Verbio is, let's say, between 10% and 25% more than the volume what we are producing ourselves. So we had to learn. We have now our logistical abilities in Rotterdam. And yes, so the plan for the future is to increase this further. The plan is to go up to 50% of our physical volumes, so the amount what we can produce on ourselves. But to make it crystal clear, Verbio will be continuously a main producer of the molecule and the trading is just something to make sure that our own plants can always run on 100% capacity. And this leads me to one question what I forget from Constantin. He was asking at which level we would increase our biomethane capacity. So here also, after this crazy time in the last 3 years, we have now no clear plan at which level we would come back to do new investments. Right now, it is absolutely not on our agenda. The first, what we want to see is that the measurement against fraud will take place, that they are efficient because if the fraud is going on, not from China anymore, maybe from Pakistan, from South America, I don't know from where that it doesn't make any sense to continue doing new investments in Europe. So first of all, we want to see that the fraud goes down. We should not be naive that it will completely go away. There will be always some fraud, but how effective will be the new regulation? And finally, what does the EU Commission and what does the German Ministry of Environment learned from the situation the last 2 and 3 years because also to be crystal clear, that fraud mainly happened in the biofuel sector. But a lot of other industries where looking what is going on in the biofuel industry and what are the measurements to protect investments which were done with the idea of supporting the energy transition. So I know that we are not the most loved child of the German Ministry of Environment. But finally, they didn't do a good job. Now they come back with a very, very restrictive new regulation. But at the end of the day, we have to look what they really bring on the ground. And that's the time minimum the next year. Let's see what is going to happen, how the markets are developing, and then we will make a decision. Okay. Some more?
Sarah Mallock: Nothing more to add. So no further questions come in. So that answer concludes our call for today. And yes, I say thank you for attending. Have a lovely remaining week. And Mr. Sauter, some final remarks from your side.
Claus Sauter: Yes. Sarah, thank you very much. You did a great job. It was a good call. Everything worked. Thank you very much for everybody who was participating. It's an honor for us that you are interested in our company. We know that it was not an easy time in the last 3 years, but it is getting better. So thank you very much. Thank you for everybody who was joining and namaste.