The Andersons, Inc. reported earnings of $16.2 million, or $0.88 per diluted share, on total revenues of $916 million for the fourth quarter ending Dec. 31, 2009. That was up significantly from the comparable year-ago period, when the company ?Çô saddled with inventory write-downs within the Plant Nutrient Group – posted a loss of $33.4 million, or $1.84 per diluted share, on revenues of $770 million.
The company had full-year 2009 net income of $38.4 million, or $2.08 per diluted share, on $3 billion in revenues, compared to 2008 earnings of $32.9 million, or $1.79 per diluted share, on total revenues of $3.5 billion.
The Plant Nutrient Group saw fourth-quarter operating income of $1.7 million on $111 million in revenues, compared with the year-ago operating loss of $74.5 million on revenues of $112 million. Full-year results for the group included $11.3 million in operating income on revenues of $491 million, compared with a 2008 operating loss of $12.3 million on revenues of $653 million. The 2008 operating loss was fueled by $84.1 million in market adjustments made during last year’s fourth quarter due to sharp declines in nutrient prices.
The Andersons noted that the integration of the Hartung Brothers Inc.’s Fertilizer Division into the Plant Nutrient Group was completed by year end. The Hartung acquisition was first announced in May 2009 (GM May 11, 2009), and completed on Aug. 1, 2009.
In a conference call with analysts, CEO Mike Anderson said the Plant Nutrient Group had “depressed volumes” on fertilizer throughout 2009, but that it saw a 75 percent increase in fourth-quarter volumes from the year-ago quarter. “Seventy-five percent up on hardly anything is not a lot, but it’s definitely an uptick,” he said.
Anderson also noted that the group has started to build nitrogen and phosphate inventories, and is “taking a serious look” at potash now that lower prices are in play. “If you look at the relationship of nutrient prices to corn right now … we would expect producers to be using nutrients,” he said. “Right now the pipeline is starting to fill up again … We’re expecting a good season.”
The Grain & Ethanol Group saw 2009 operating income of $51.4 million on revenues of $2.2 billion, compared with 2008 operating income of $43.6 million on revenues of $2.4 billion. The group’s grain business had a record year, the company said, while the ethanol business had its second highest year, resulting from significantly increased margins during the second half of the year.
For the fourth quarter, the Grain & Ethanol Group’s operating income was $27.8 million on revenues of $722 million, compared with $11.9 million and $565 million, respectively, in the year-ago fourth quarter. The increase in the operating income was attributed to improved results in the ethanol business, which had its highest quarter since entering the business four years ago. These improvements were partially offset by lower quarterly results in the grain business, due primarily to the late harvest in 2009.
Driven by an almost 20 percent increase in lawn business volumes, the Turf & Specialty Group’s 2009 full year operating income was a record $4.7 million on $125 million of revenues, compared with $2.3 million in income and $119 million in revenues in 2008. For the fourth quarter, the group incurred an operating loss of $1.1 million on $19 million in revenues, compared with $1.1 million and $20 million, respectively, in the 2008 fourth quarter.
Reduced consumer spending led to a 2009 sales drop within the Retail Group, which posted a full-year operating loss of $2.8 million and a fourth-quarter loss of $0.7 million. In 2008, the group saw operating income of $0.8 million for the full year and $1 million for the fourth quarter.
The Rail Group also posted a loss in 2009 resulting from double digit declines in national rail traffic. The group saw an operating loss of $1 million for the year and $1.5 million for the fourth quarter, compared with operating income of $19.8 million for the year and $3.3 million for the fourth quarter in 2008. The company said the average utilization rate (the percentage of the fleet’s railcars in service) for 2009 was 78.1 percent, which was down significantly from the prior year rate of 92.5 percent.
“Clearly, our full year earnings were heavily influenced by the results within our agricultural business units,” said Anderson. Noting the record results in the grain and turf businesses, along with the impact of the weak economy on the rail and retail groups, Anderson said the company’s “strategy of purposeful diversification allows us to remain a strong company, even when external factors are significantly impacting one or more of our groups.”
Looking ahead, Anderson said he anticipates continued improvements in the Grain & Ethanol and Plant Nutrient groups. “I believe that our Plant Nutrient Group will have an improved level of profitability due to farmers returning to more normal application rates and an expectation that corn acres will increase modestly, and the fact that we will begin to reap the benefits of our recent acquisitions,” he said.