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Bioenergy Business Outlook Survey Measures Industry Confidence

October 25, 2011
Biofuels Digests’ Bioenergy Business Outlook Survey, co-sponsored by BIO, is a quarterly indicator of business confidence, financial outlook and growth intentions. The results of the survey provide valuable insight into the mood of leaders in the bioenergy industry. More than a third of respondents each quarter identify themselves as chief executive or owner of their business.

Nearly two-thirds of respondents identify themselves as directly involved in bioenergy production, either as producers, investors, business partners or researchers. The other third of respondents identify themselves as suppliers, either of equipment or engineering, legal and business services.

More than half of respondents describe their companies as young, small and just beginning to generate revenue. In the three surveys taken to date in 2011, more than 50 percent of respondents consistently have described their company as in business fewer than six years. Likewise, approximately 60 percent report have reported fewer than 24 employees at their companies. And one-third of respondents have consistently reported revenues under $100,000.

Since the first quarter of 2011 (Q1), international participation in the survey has increased. In Q1, 83 percent of respondents said they were headquartered in the U.S., compared to just 63 percent who said so in the most recent third quarter (Q3) survey. While nearly 74 percent of respondents report operating in the U.S., 31 percent and 33 percent, respectively, say they operate or also operate in Canada and the EU. Respondents are increasingly reporting operations (18 percent in Q3 compared to 13 percent in Q1) in Australia, New Zealand and the Pacific Islands.

Respondents are asked each quarter to rate whether they are more optimistic now about their company’s and the industry’s prospects for growth than they were 12 months prior. The mood of respondents has grown slightly more gloomy over the year. In the most recent survey (Q3), 79. 5 percent said they were more optimistic about their company’s growth prospects, while 72 percent said they were more optimistic about the industry’s. But in Q1, 85 percent of respondents reported feeling more optimistic about both their company’s and the industry’s prospects than 12 months prior.

Much of the growing pessimism appears tied to perceived governmental support for the industry. When asked to rate their government’s attitude toward bioenergy, 5.5% of respondents in Q3 said “very unsupportive,” compared to just 2 percent in Q1. And when asked what they consider the most important drivers of growth for the industry, smaller percentages cited government mandates or subsidies in Q3 than in Q1. Further, when asked what government policies could create opportunities for industry revenue and job growth, the percentage of respondents saying “maintain the status quo” jumped from 2 percent in Q1 to 5 percent in Q3.

That pessimism is likely tied to expectations about financing. Similar percentages of respondents reported seeking additional financing during the previous 12 months, although a lower percentage reported success in securing it. A smaller percentage of respondents expect additional completed IPOs in the next 12 months (58 percent in Q3, compared to 72 percent in Q1. More respondents expect financing arrangements to take the form of mergers and acquisitions. Respondents to the survey expressed continued optimism in their business’ prospects for revenue growth and hiring.

In Q3, the U.S. topped the list as a key market for growth for the first time in 2011, with 43.5 percent of respondents ranking it as such. The EU was a close second (42 percent), with Brazil (41 percent) and Canada (36 percent) next. The EU had been at the top of the list in Q1 and the second quarter (Q2), with Brazil also coming ahead of the U.S. in Q2. Australia, New Zealand and the Pacific Islands and South East Asia are increasingly reported as key growth areas. In Q1, 13 percent and 15 percent, respectively, reported Australia and South East Asia as key growth areas; but in Q3, 22.4 percent and 30 percent, respectively, reported the same.

The complete results of the survey are available from Biofuels Digest. Results from previous surveys can also be found connected to the article on Biofuels Digest. BIO will continue to encourage member companies and the broader industry to take part in the survey each quarter.