The Andersons Inc.’s Plant Nutrient Group shone during the second quarter ending June 30, 2008, posting operating income of $47.4 million on revenues of $274 million, compared to the year-ago $17.1 million and $183 million, respectively. According to the company, these record results resulted from significant margin increases, primarily from inventory value appreciation stemming from the company’s plentiful storage space and unprecedented escalation in basic nutrient prices. The company said the escalation in nutrient prices, lower corn acres, and pre-season buying at the end of 2007 actually led to a reduced sales volume versus the year-ago period.
“Our second quarter and first half results are outstanding,” said The Andersons President and CEO Mike Anderson. “Both our Plant Nutrient and Grain and Ethanol Groups contributed significantly to our income during the period. I want to extend special thanks to our Plant Nutrient Group team. The team has worked tirelessly to serve customers and optimize their inventory position, while simultaneously exploring multiple growth opportunities and integrating Douglass Fertilizer into their business. It was truly a team effort and to see their results is rewarding. We are also excited by the addition of the three pelleted lime facilities yesterday, as this acquisition, like Douglass Fertilizer, is consistent with our strategic goal of growing our business to a national footprint.”
The company says it is now the largest pelleted lime manufacturer in North America.
First-half nutrient group income was $54.9 million on revenues of $379 million, versus the year-ago $17.5 million and $249 million, respectively.
Anderson noted that the company has raised its guidance for the year to $5.00-$5.40 per diluted share (GM Aug. 4, p. 10), with that being heavily influenced by unprecedented performance from the Plant Nutrient Group. Previous guidance had been $4.40-$4.80.
Anderson did a have a few words of caution to analysts. “I feel I should mention that although our margins continue to be strong as we move into the second half, based on inventory we own or have contracted to purchase, we do not believe that these margins are sustainable over the long, long term. Also, remember with the diversity of our business units there are numerous factors that could impact the full year results, both good and bad.”
As an example, operating income from the rail group was off somewhat during the second quarter, to $4.9 million on sales of $43 million versus the year-ago $6.9 million and $42 million, respectively. Anderson told analysts lumber being hauled for new homes is way down.
Company-wide second quarter net income was $45.6 million ($2.48 per share) on sales of $1.1 billion, compared to the year-ago $25.5 million ($1.40 per share) and $634.2 million, respectively. Six-month net income was $53.4 million ($2.91 per share) on sales of $1.8 billion versus the year-ago $34.7 million ($1.90 per share) and $1.04 billion, respectively.