Pacific Ethanol, Inc. reported a fourth-quarter loss Wednesday as the company continued to grapple with a slump in ethanol prices.
The Sacramento ethanol producer, which was founded in Fresno in 2003 and has a plant in Madera, said it lost $753,000 in the quarter, compared with a profit of $13.1 million the year before.
Revenue shot up 47 percent to $376.8 million, reflecting the company’s acquisition of a major Midwestern ethanol producer last July. But profit margins deteriorated because of the continued decline in ethanol prices.
The price of the fuel additive generally rises and falls with the price of gasoline, and Pacific Ethanol was able to sell its product for an average of just $1.66 a gallon during the fourth quarter. A year earlier, the average price was $2.15 a gallon.
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Company officials said the firm is adjusting production at its plants to reflect market conditions. Pacific Ethanol operates eight plants in the West and Midwest, including two in California, in Stockton and Madera.
“In the first quarter of 2016, we are moderating production levels to match supply and demand,” President and Chief Executive Officer Neil Koehler said in a prepared statement. “While the demand for ethanol continues to grow, current industry ethanol inventories remain high. We are confident that the fundamentals of ethanol as a valuable source of octane and carbon reductions will support continued growth in demand and improved production margins.”
The price drop took a toll on full-year results. Pacific Ethanol lost $18.8 million in 2015, compared with a profit of $26 million in 2014. Revenue grew to $1.19 billion from $1.11 billion.
Pacific Ethanol shares closed at $4.21, down 5 cents, on the Nasdaq market.