Avril forced to make short-term adjustments to its biodiesel production in 2016

Avril forced to make short-term adjustments to its biodiesel production in 2016

On Wednesday 20 April, in the context of an extraordinary meeting of its Works Council, the Avril Group announced its plan to temporarily scale down its esterification activities in France in order to cope with unfavorable economic and market conditions while at the same time preserving jobs.

Reduction in Saipol's activities in France until the end of 2016

The plan provides for a scaling down between August and the end of 2016 of the esterification activities of Saipol, an Avril Group subsidiary.  This reduction results from economic factors, notably a marked drop in orders; Saipol's sales projections in early April 2016 reached only 928,000 tonnes, as opposed to 1.5 million tonnes at the same time in 2015.

The plan will be adapted individually to each site, and will thus affect Saipol's five esterification plants in France: Bassens (Gironde), Grand-Couronne (Seine Maritime), Le Mériot (Aube), Montoir-de-Bretagne (Loire Atlantique) and Sète (Hérault).

The Group's managers have undertaken to make every effort to ensure that these measures will have no impact on jobs.

Adjustment of production to deal with unfavorable market conditions

The plan is being introduced in response to a persistent deterioration of economic and regulatory conditions in this market, under the combined effects of:

  • overcapacity in a European biodiesel market that is producing a surplus despite falls in diesel prices and in the Euro-Dollar exchange rate, the latter favoring the import of esters by European oil companies that benefit from the double accounting system[1];
  • the development in the European market of hydrotreated vegetable oils (HVO) used to produce biodiesel, favored by the growth of cheaper palm oil imports;
  • the heterogeneous translation in practice within the EU of the regulatory framework for the implementation of directives relating to the development of renewable energy in general and biofuels in particular;
  • the declining competitiveness of French and European grain, in a context of smaller rapeseed harvests within the EU.

This situation has severely affected the competitiveness, profitability and growth prospects of Saipol's activities in France, the company having recorded a marked drop in its sales volumes in 2015 and 2016. It is therefore necessary to adjust production immediately to this reduction in orders, so as to preserve the competitiveness and future of crushing and esterification, the sale of biodiesel from the agricultural sector and the jobs associated with these activities.

Determined to ensure a long-term future for the French biodiesel market

On numerous occasions, Avril has warned the authorities of the threat posed by these deteriorating conditions to the survival of the biodiesel market and the agro-industrial sector in France.

This threat is likely to become even greater if Total's plan goes ahead to convert its production unit in La Mède (Bouches-du-Rhône) in the spring of 2017, as this would increase Total's annual production of HVO from 20,000 to at least 500,000 tonnes, thus competing to the same degree with the biodiesel produced by the French agro-industrial sector.

However, this plan will never affect the determination of the Avril Group, and its subsidiary Saipol, to pursue its production of biodiesel - a renewable energy source that contributes to energy transition - and to preserve and develop this market for French oilseed producers.

 

Contact:

Tom Doron
+33 (0)1 78 14 80 09 / +33 (0)6 26 28 39 94
tom.doron@groupeavril.com

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About Saipol:

An Avril Group subsidiary, Saipol produces and sells in France refined vegetable oils for human foods, protein-rich oilseed meals for animal feeds, biodiesel under the Diester® brand (which is incorporated at a rate of 7-8% in the diesel used by all such vehicles in France), and vegetable glycerin used for numerous industrial applications.

About the Avril Group:

Set up in 1983 at the initiative of French farmers in order to assure the future of the vegetable oil and proteins sector, Avril has become a major industrial and financial group that is developing in France and internationally. 

Present in sectors as diverse as human foods and animal feeds, renewable energies and chemistry, Avril owns a portfolio of strong brands that are leaders in their markets: Diester®, Sanders, Lesieur, Puget, Matines, Bunica, Taous…

In more than 30 years, the Group has changed in size but its purpose has remained the same: to create sustainable value in the vegetable oils and proteins sector while contributing to better foods for humans and preservation of the planet. 

To fulfill its mission, Avril draws strength from its industrial activities organized around its industrial activities in the vegetable oils and animal production sectors, and from its financial activity, which operates through the finance and development company Sofiprotéol. 

In 2015, the Avril Group achieved turnover worth €6.1 billion.  It counts 7,200 employees working in 21 countries.

www.groupeavril.com | Twitter: @Avril

 

[1]              AFME/WOME (animal fat methyl esters/waste oil methyl esters)