Stobart aims to supply 2 million metric tons of biomass annually

By Erin Voegele | October 28, 2016

Stobart Group Ltd. has released interim results for the six months ended Aug. 31, reporting strong growth in its biomass business is expected over the next two years as existing fuel supply contracts come on stream to meet the contracted demand from new biomass power plants as they are commissioned over that period. The company said its energy division aims to deliver 2 million metric tons of biomass annually by 2018.

According to Stobart, revenue and volumes supplied for the first half of the year were at a similar level to the same period last year, with 469,259 metric tons supplied during the period. The company noted that increased volumes on certain contracts, combined with improved margin performance, were offset by a reduction in volume on certain export contracts.

Stobart said its contact with the Speyside Biomass Plant in Scotland commenced during the first half of the year, with 4,260 metric tons of biomass delivered. The company said volumes are expected to increase significantly during the second half of the year as the plant ramps up to full operational volumes.

Looking into the future, Stobart said the majority of new plants are expected to open on schedule next year, allowing the company to reach its goal of supplying 2 million metric tons of biomass per year by 2018. For the full year 2016, the company said it expects to achieve its strategic target of generating EBITDA of £10 ($12.17) per metric ton of biomass fuel supplied during that period.

The company also noted that margin performance in its energy division was bolstered by the implementation of several cost efficiency measures, including an exercise to streamline its transport business in preparation for the energy division’s planned growth. Stobart also indicated it aims to maximize the service and value of its biomass contracts by investing in complementary infrastructure and assets in order to process around 50 percent of the total volume required. Stobart said construction is underway for a wood processing facility at the site of the Widnes combined-heat-and-power (CHP) plant, where Stobart Energy has contracted to deliver biomass fuel. The company also noted a large storage and processing site in Tilbury is operational, with additional sites secured in Yorkshire and the North East. According to Stobart, it is working with the Environment Agency to promote the professional and safe storage of waste wood at its sites.

In addition to its energy division, Stobart also has business divisions dedicated to rail, aviation and infrastructure. Overall, the company reported revenue from continuing operations of £65.3 million, up 13 percent from the same period of the prior year. Underlying EBITDA was up 102 percent, reaching £20.2 million. Underlying profit before tax was up 252 percent, at £16.2 million. Profit before tax increased to £10.8 million, up from £600,000 during the same period of last year.