AgriCensus Report

Grain handler The Andersons posts loss on bad weather, weak demand

US grain handling company The Andersons has announced a $14-million loss in the first quarter of the year compared with a $1.7 million loss a year earlier, as pre-tax income in the company’s Trade and Plant Nutrient groups weighed on earnings.

The company, which is divided into a Trade, Ethanol, Plant Nutrient and a Rail Group, said the report included an $8.7-million adjustment related to its purchase of the Lansing Trade Group, which tripled the size of the company’s grain business.

The company’s Trade Group, which comprises more than 50 grain terminals in 11 states across the US, posted a $5.9 million loss compared to a $1.2-million loss a year earlier, with the company saying weak domestic markets, foreign trade uncertainty and the floods in Nebraska took its toll on earnings.

“Income derived from grain originations and the group’s assets was down slightly on limited farmer selling and diminished income from storing wheat; those results also included a $2.2 million insured loss due to property damage caused by heavy rains in Nebraska,” the company said.

The company’s Plant Nutrients Group, which includes fertilizer production, posted a $3.9 million loss versus a profit of $1.1 million a year earlier largely due to cold and wet weather hitting demand.

“Farmers may not have time or the inclination use as much fertiliser as anticipated in the face of low grain prices,” executives at the company said on a conference call on Tuesday.

In terms of the company’s ethanol business, it posted a $2.6 million profit compared with $3.1 million a year earlier, despite what the company said was a “weak margin environment” as the US suffered from an oversupply of corn that is being funnelled into ethanol production.

The company added that it had already hedged 40% of its Q2 ethanol production at “acceptable margins”.

However, Brian Valentine, the company’s vice president and CFO, told investors that any resolution to a trade deal with China would give a boost to ethanol and exports of DDGS.

“Short-term, we think it could be very positive for ethanol if ethanol is imported alongside DDGs,” he said.

“A trade deal with China would be a shot in the shoulder we’ve all been waiting for, especially ethanol,” he added.

The Andersons closed its purchase of the Lansing Trade Group earlier this year, buying out the 67.5% share of the company it did not previously own from Macquarie Bank and Chinese meat processing company New Hope.

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