The Andersons Inc. stumbled into a financial briar patch in 2015 and suffered its first annual net loss since going public in 1996.
Challenges continued in 2016, including lower railroad traffic, a plant toxin that infected the corn used for ethanol, and a harvest that still had not fully rebounded.
Overall, last year “was a disappointing first year as CEO,” said Pat Bowe, who became The Andersons’ chief executive officer in the fall of 2015.
But on Thursday, a day after releasing its annual earnings showing an $11.6 million profit in 2016 on revenues of $3.9 billion, Mr. Bowe said he was optimistic about 2017 during a conference call with Wall Street analysts.
“We’ve laid the foundation for improved performance and I’m optimistic about our business going forward,” he said.
Last year’s results included impairment charges of $9.1 million, including $6.5 million for the retail group, which is being eliminated, and $2.3 million for the plant-nutrient group. The retail stores, which will close by the end of May, lost $8.8 million last year. John Granato, the chief financial officer, said the company this year likely will write off another $9 million to $14 million related to the closings.
Mr. Bowe said he is optimistic about 2017 because productivity initiatives he began last year are paying off.
The Andersons last year cut its work force by more than 400 positions, or 10 percent, and reduced its operating costs by $10 million, a goal the CEO wanted to meet by the end of 2017.
The company has a new goal of reducing cost by another $10 million by the end of 2018. “We harvested much of the lower hanging fruit in 2016 and the next level of productivity will take extra efforts,” Mr. Bowe said.
The CEO said a drop in rail traffic last year seems to be turning around, and ethanol profit margins are improving. Farmers have set a goal of planting about 93 million acres of corn and up to 90 acres of soybeans this year, and, while the corn plantings are less than 2016, The Andersons is optimistic.
“It’s still a strong number. ... If weather conditions in crop fields are comparable to those in 2016, there should be a very good opportunity for the grain group to sustain its recovery,” he said.
The ethanol group’s profit margins has struggled. Three of the company plants located in the Eastern Cornbelt of Ohio, Michigan, and Indiana, had lower profits last year because of vomitoxin, a plant toxin that makes animals and humans sick. Once corn is processed for ethanol, what’s left is feedstock called distiller’s dried grains. Mr. Bowe said parts of the corn crop The Andersons purchased for its ethanol plants was tainted with vomitoxin, hurting its sales of the feedstock.
Contact Jon Chavez at: email@example.com or 419-724-6128.
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