The Andersons, Inc. reports third quarter results
The Anderson reported net income attributable to the company of US$1.7 million for the third quarter of 2016, or US$0.06 per diluted share, on revenues of US$860 million.
This represents a US$2.9 million improvement compared to the net loss of US$1.2 million in the same period in 2015, or (US$0.04) per diluted share, on revenues of US$909 million.
Year to date, the company has produced net income attributable to The Andersons of US$1.4 million or US$0.05 per diluted share compared to the prior year when it generated US$34 million, or US$1.19 per diluted share.
"Conditions are improving for our Grain Group and margins are strong for the Ethanol Group, but challenges persist with our Plant Nutrient Group facing weak margins and our Rail Group continuing to experience softening in utilisation," said CEO Pat Bowe. "In this mixed environment, the team is making good progress on our US$10 million cost reduction initiative and continuing to take action on the items within our control to combat uncertainty in some of our markets."
Start of the turnaround for the Grain Group
In the third quarter, the Grain Group benefited from having shed its underperforming Iowa assets earlier this year and positioned itself to take advantage of improving crop conditions in the Eastern Corn Belt. Overall, grain production in the Eastern Corn Belt has rebounded from last year. Bean yields were strong and corn did well in most markets with some pockets of weaker yields.
Third quarter pre-tax income for the Grain Group was US$1.9 million, a US$1.8 million increase over the same period last year. Base Grain operations were up US$2.5 million year over year, driven by the elimination of losses generated by the Group's assets in Iowa last year. Grain's affiliates continued to lag year over year, but have improved from the losses incurred in the first half of the year.
Year to date results for the Group were a pre-tax loss of US$28.6 million, a drop of US$32.6 million from the US$4.0 million in pre-tax income realised in the same period "last year.
Harvest is well underway in most of The Anderson's markets and substantially done in some. Factors the company is seeing that will impact its results in the fourth quarter and first half of 2017 include:
- Although there are some localised areas of weaker production in Michigan and Ohio, the majority of the Group's draw areas has enjoyed significantly better production than last year, allowing them to purchase grain at good levels.
- Wheat storage rates should be stronger year over year as carries in the wheat market were supported by increased Variable Storage Rates (VSR) that went into effect in third quarter. The market is currently supporting a little over half of the full carry benefit of the VSR increases.
- Performance of the added elevator capacity in Tennessee, US, was muted during the third quarter by stronger than normal export demand and cheaper barge freight on the Mississippi River, which increased local competition during their harvest.
- While results in Grain's affiliates have improved compared to the first two quarters of this year, Lansing Trade Group is behind expectations largely attributed to compressed margins at its grain facilities and lower DDG flows to China given recently imposed import duties.
For more of The Anderson's third quarter report, please go to:
- The Anderson