Ethanol contributes to record Q2 earnings for The Andersons

By Kris Bevill | August 05, 2011

The second quarter of 2011 proved to be a good one for diversified agriculture firm The Andersons Inc. In an earnings report released Aug. 3, the company’s ethanol and grain segment showed particularly strong performance over the past three months, ending the quarter with a record operating income of $45.3 million. In comparison, that segment reported operating income of $19.6 million during the same time period last year. Ethanol earned the company $8.8 million in operating income this quarter, up from $6.2 million in the second quarter of 2010. The grain division also reported record operating income for the quarter—$36.5 million this year compared to $13.4 million in the second quarter of 2010.

Company leaders attributed ethanol’s strong performance to improved margins during the quarter due in part to lower cost corn purchased by the company earlier this year. The company currently operates three ethanol plants—110 MMgy plants in Clymers, Ind., and Greenville, Ohio, and a 55 MMgy plant in Albion, Mich. During a conference call to discuss the quarterly earnings, company CEO Mike Anderson said ethanol margins became more profitable during the end of the quarter as markets reacted to some plants shutting down and increased exports of U.S. ethanol. That has trailed off in recent weeks and he expects the second half of the year to be less profitable than the first half, but the company expects a “decent” harvest season and predicts the rest of the ethanol segment to operate at a break-even rate for the remainder of the year.

Overall, the company earned a record $62.5 million during the first half of 2011, compared to $37.4 million in the first half of 2010. “We are pleased to be able to report record year-to-date earnings,” Anderson stated. “While we have always mentioned that our second and fourth quarters are strong for us, these second quarter results were unusually strong due to the significant and accelerated grain basis income. The investments made in our agricultural businesses over the last several years are benefitting from a positive agricultural environment.”