The Andersons Inc. posted a net loss for the fourth quarter ending Dec. 31, 2008, with much of that attributed to the company’s Plant Nutrient Group. The fourth-quarter net loss was $33.4 million ($1.85 per diluted share) on sales of $770.1 million, versus the year-ago net income of $23.5 million ($1.28 per share) and $784.6 million, respectively. Full-year results were $32.9 million ($1.79 per share) on sales of $3.49 billion, versus 2007’s $68.8 million ($3.75 per share) and $2.38 billion. The 2007 results include a one-time $7.7 million gain.
“Although our full year earnings could be reviewed as respectable versus history, since they are our third best historical performance, this is overshadowed by the fact that I am deeply disappointed in our fourth quarter results – we could have done better,” said President and CEO Mike Anderson. “The decline in our results was largely a result of the inventory and contract adjustments within our Plant Nutrient Group. I want our shareholders to know that we are taking a hard look at the risk management processes in that group and fully intend to make improvements that we believe will reduce the likelihood of similar events in the future.”
The company said its full-year results were heavily influenced by significant pre-tax inventory and contract adjustments of $97.2 million within the Plant Nutrient Group. The company said it will continue to monitor the fertilizer market and could further adjust the value of its year-end inventory if significant price appreciation or depreciation occurs prior to the filing of its 10K in late February. However, it noted that market prices have recently stabilized and that the existing write-down may account for most, if not all, of the adjustments.
The Andersons said going into the fourth quarter, Plant Nutrient Group volumes were only slightly behind the prior year. However, fourth-quarter volumes dropped by 50 percent. The unit’s fourth-quarter operating loss was $74.5 million on sales of $111.5 million, versus the year-ago operating income of $8.7 million and $140 million, respectively. Inventory adjustments taken in the quarter were $84.1 million. The unit had a full year operating loss of $12.3 million on sales of $652.5 million, versus 2007’s income of $27.1 million and sales of $466.4 million.
“Clearly our full year earnings were heavily influenced by the results within our Plant Nutrient Group,” said Anderson. “The reduced earnings were also partially attributable to the economics in the ethanol industry and reduced income from our investment in Lansing Trade Group. On a positive note, both our Grain Division and Rail Group had great years. Also, our propriety product strategy with the Turf & Specialty Group is proving to be successful. In addition, we made wise and timely decisions early in the year to improve our capital structure and liquidity of the company.”