The Andersons reports ethanol loss, but strong earnings overall

By Susanne Retka Schill | February 08, 2013

The Andersons Inc. reported a strong year for its diversified agribusiness, earning $79.5 million, or $4.23 per diluted share, on revenues of $5.3 billion. The company saw record operating income in its rail and plant nutrient groups at $42.8 million and $39.3 million respectively, although its ethanol group had an operating loss of $3.7 million in 2012 compared to operating income of $23.3 million the year before. The retail group also experienced an operating loss of $4 million, while the turf and specialty group had $2.2 million in operating income on revenues of $131 million. The grain group’s operating income was $63.6 million, compared to $87.3 million in the prior year. Late in 2012, the group acquired approximately 32 million bushels grain storage capacity in the acquisition of 12 facilities in Iowa and Tennessee from the Green Plains Grain Co.

The Andersons earned $15 million in the fourth quarter of 2012, or 80 cents per diluted share, on revenues of $1.7 billion.  In the same three month period of 2011, the company reported net income of $21.7 million, or $1.17 per diluted share, on revenues of $1.3 billion. The majority of the year-to-year revenue increase relates to rising volume and prices, and growth, in the agricultural businesses. 

In its discussion of the various group performances, The Andersons said that the decline in operating income for the ethanol group was due to significantly lower ethanol margins resulting from weak gasoline demand, an oversupply of ethanol and high corn costs caused by last year's drought.   The ethanol plants, however, continue to benefit from coproduct sales of corn oil, E85, distillers dried grains and CO2.  Total 2012 revenues for the ethanol gorup were $743 million, up from $642 million in 2011.  Revenues increased due to an increase in volume, the majority of which was due to the addition of the Denison, Iowa, ethanol facility in 2012.  The group's fourth quarter operating loss was $800,000 on revenues of $215 million.  During the same three month period of 2011, operating income was $6.5 million on revenues of $165 million.

The Andersons operate four ethanol plants in Albion, Mich., Logansport, Ind., Denison, Iowa, and Greenville, Ohio, with a combined capacity of 373 MMgy.

"This is definitely one of those years where our purposeful diversification paid off," CEO Mike Anderson said in the earnings statement.  "The rail group had its best year ever, due to skillful management of its railcar portfolio.  Similarly, our plant nutrient group had its second record year in a row even though margins decreased, as they increased sales volume and prudently managed their inventory.  Our grain group also had good results, in part due to the record earnings of Lansing Trade group, even though there were unfavorable impacts caused by the drought," Anderson added.  "In the last year we demonstrated our commitment to growth by acquiring New Eezy Grow Inc., Denison, Mt. Pulaski and the majority of the assets of the Green Plains Grain Co.  We also opened our Anselmo, Neb., grain elevator in August and look forward to opening a new railcar blast and paint facility this spring.  As we have in the past, we will continue to focus on long term earnings growth."