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Ceres Announces Fiscal Third Quarter 2012 Financial Results

Energy crop company Ceres, Inc. (Nasdaq: CERE) today announced financial results for the third quarter ended May 31, 2012 and provided an update on its business in Brazil, its largest immediate commercial opportunity.

The company reported that ethanol mills have completed their second season of commercial-scale evaluations of Ceres’ sweet sorghum hybrids in Brazil. The crops were successfully grown, harvested and processed into ethanol, despite severe drought conditions that resulted in 40% to 70% less rainfall than normal during the growing season.

“The increasing demand for ethanol and ongoing sugarcane shortages continue to place an imperative on Brazil’s mills to find new ways to expand supply,” said Richard Hamilton, President and Chief Executive Officer of Ceres. “We believe that sweet sorghum offers a compelling opportunity to do so with existing steel in the ground.

“Under some very challenging agricultural conditions we outperformed commercial competitors and, at locations where adequate rainfall was available, we demonstrated the economic potential of our products as a season-opening feedstock for biofuel and biopower. In the coming season, we plan to expand our portfolio of products with new hybrids from our development pipeline. These new hybrids will fill a late-season harvest window and have demonstrated significantly higher performance than current products,” Hamilton said.

BUSINESS HIGHLIGHTS

  • Ceres’ new sweet sorghum hybrids significantly outperformed its initial commercial products in multiple field evaluations during the 2011-2012 growing season in Brazil. In product development trials and at the company’s breeding center, where field evaluation plots are irrigated and managed more closely than commercial fields, stalk yields for its new products averaged up to 80 metric tons/hectare. Other hybrids earlier in Ceres’ development pipeline demonstrated yields exceeding 120 metric tons/ha.
  • During the season, Ceres’ two commercial hybrids out-yielded varieties from commercial competitors at locations where side-by-side comparisons were available.
  • Ethanol mills in Brazil reported continued progress in crop performance over the previous season. Overall yields and biomass quality, however, were negatively impacted, primarily by drought-related damage, such as stunted growth, and the late start of the sugarcane season which pushed sweet sorghum harvest dates past their optimal times. The severe conditions also led to wide variability in results from location to location. Of mills that reported results, yields of the company’s first-generation hybrids ranged from approximately 30 metric tons of stalk per hectare to approximately 65 metric tons per hectare. Fermentation yields, which are typically lower at the beginning of the ethanol production season than when the mills are fully operational, ranged from 30 liters of ethanol per metric ton of sweet sorghum stalk to 50 liters per metric ton. To date, the company has collected yield results from 13 mill groups that planted Ceres’ hybrids.
  • The company intends to launch up to six new sweet sorghum hybrids next season, and has completed field trials required to register these new products with the Brazilian government. Ceres expects to complete the registration process prior to the calendar year 2012-2013 growing season.
  • The Brazilian government’s agricultural research corporation, Embrapa, selected Ceres Sementes do Brasil to evaluate its leading sweet sorghum variety for use in ethanol production. Under the agreement, Ceres has commercialization rights to the variety.
  • In the U.S., Ceres sold seed or provided seed under collaboration agreements to more than 12 pilot or demonstration-scale bioenergy projects this spring. These projects consist mostly of biomass-to-biofuel and biopower feedstock evaluations.
  • In the U.S., Ceres announced its improved sweet sorghum hybrids were successfully processed into renewable chemicals by Amyris, Inc. The pilot project demonstrated that conversion efficiency of sweet sorghum sugars was similar to sugarcane.

FINANCIAL RESULTS

Total revenues for the three months ended May 31, 2012 declined to $1.2 million from $1.6 million in the same period in fiscal year 2011 due to decreased activity under the company’s various grants and collaborations. Due to the seasonality of seed sales, quarterly revenues are not indicative of full year results.

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