The Andersons Inc. reported a 78 percent drop in second-quarter operating income in their Plant Nutrient Group, to $10.3 million on revenues of $198 million, compared to the year-ago record operating income of $47.4 million on revenues of $274 million.
The company said margins were significantly lower as basic nutrient prices deflated in 2009, whereas in 2008 margins greatly increased as nutrient prices inflated. Retailers reducing their nutrient inventory holdings, and lower application rates of basic nutrients (potash, potassium, and to a lesser degree, nitrogen), led to reduced sales volume this quarter.
The Plant Nutrient Group’s first-half operating income was $12.4 million on revenues of $309 million, versus the year-ago record $54.9 million and $379 million.
“Although we would have liked better results this quarter, it is important to remember that last year’s second quarter results included unprecedented margins in our Plant Nutrient Group,” said Chairman and CEO Mike Anderson. “We are pleased with the results of our grain and ethanol businesses. The grain business performance was strong, and our ethanol business returned to profitability, which is an accomplishment in the current ethanol environment. Conversely, we continue to be disappointed with the Lansing Trade Group results this year. The Plant Nutrient Group has returned to solid financial performance, and we believe the lower of cost or market issues are behind us. The Turf & Specialty Group set an earnings record as the value added and proprietary product strategy being pursued continues to be successful. Our Rail Group, and to a lesser extent our Retail Group, however, continue to be impacted by the overall economic decline. These results continue to demonstrate that our purposeful diversification allows us to remain a strong and profitable company, even when some businesses are underperforming.”
Company-wide net income for the second quarter ending June 30 was off 65 percent, to $15.9 million ($.87 per diluted share) on sales of $810.9 million, versus the year-ago $45.6 million ($2.48 per share) and $1.1 billion, respectively. Six-month net income was $20.9 million ($1.14 per share) on sales of $1.51 billion, compared to the year-ago $53.4 million ($2.90 per share) and $1.8 billion.