US ethanol play GTL Resources made £4.2 million pre-tax in its first operating year and sounds bullish despite a ‘challenging’ environment.

The AIM-quoted company, whose Illinois River Energy plant produces ethanol for the premium Chicago market, achieved revenues of £68 million in the year to March, against £13 million in the previous financial year, when the plant was only up and running for the last three months and GTL lost nearly £1million. Steered by chief executive officer Richard Ruebe, the company says it managed to offset margin pressure from the rising price of corn inputs with the help of an effective hedging strategy, advised by the Cargill US commodities giant, and corn and gas use efficiencies at Illinois River, which produced 17 per cent above expected capacity.

Even so, the company, whose previous executive chairman Peter Middleton left in December, says margins declined in the second half of 2007. Non-executive chairman Julia Henderson argues that a ‘significant improvement in margins is required for the US ethanol industry to realise satisfactory returns’.

The company says that expansion to double the size of the business is fully funded and ‘ahead of schedule’, and argues that it is ‘well positioned to continue above peer group performance’. Floated at 30p ten years ago, GTL shares soared to 377.5p in 2006, but have since plunged back to 23p, at which level they have speculative appeal.

Save 50% off your first year’s subscription to Growth Company Investor magazine, and gain immediate access to all the recommendations online. Click here.