The Andersons executes among volatile markets | 2021-08-05 – Food Business News

0
22

MAUMEE, OHIO — All four of The Andersons business segments saw significant earnings growth in the second quarter of 2021, boosting the company to its best second-quarter earnings since 2014.

Net income at The Andersons totaled $43.5 million in the second quarter ended June 30, 2021, equal to $1.30 per share on the common stock, up 43% from $30.4 million in the second quarter of 2020.

“I’m very pleased that each of our four businesses delivered outstanding, year-over-year improvement with good execution in volatile markets,” said Patrick E. Bowe, president, chief executive officer and director of The Andersons. “I’m proud of our team; they anticipated market opportunities and executed well. These market conditions play into our strengths of commodity trading, logistics, and position management. We expect that North American demand will remain strong and currently anticipate large harvests in our key draw areas this fall, which should drive strong performance into 2022.”

The Trade segment recorded an adjusted pretax income of $14.1 million for the quarter compared to an adjusted pretax income of $1.4 million in the second quarter of 2020. The difference in reported and adjusted income in both periods was attributable to stock compensation expense associated with the 2019 acquisition of Lansing Trade Group.

“The Trade Group had another solid quarter, executing well in dynamic grain markets where tightening grain stocks have provided excellent merchandising and elevation opportunities,” Mr. Bowe said during an Aug. 4 conference call with analysts. “Corn and soybean growing conditions in our key draw areas are outstanding, and we anticipate good buying opportunities into harvest. Winter wheat harvest volume was better-than-expected in our draw area, and we’re seeing some carry return to the corn and wheat markets.”

Looking ahead for the Trade segment, Mr. Bowe said he believes opportunities in the company’s ag portfolio will remain strong.

“While export demand has seasonally slowed, we expect high global demand for US crops into 2022,” he said. “This demand continues to support world grain trade and prices higher than historical averages. Crops in our draw areas are in great shape, while some other parts of the country are seeing dry conditions. We’re optimistic about an abundant harvest that will provide us additional merchandising and elevation opportunities. Given these conditions, we remain positive in our outlook for our Trade segment.”

The Ethanol segment had a pretax income of $23.5 million in the second quarter, up from $900,000 in the same period in 2020. The Andersons attributed the boost in ethanol earnings to strong co-product margins at the five ethanol plants and profitable third-party trading of ethanol, feed ingredients and vegetable oil.

“In our Ethanol segment, they recorded one of its — the best quarters ever with income generated from strong co-product values and third-party trading results, combined with the reversal of unrealized mark-to-market losses resulting from our hedging programs,” Mr. Bowe said.

Even with demand for fuel returning to pre-pandemic levels Mr. Bowe expects challenges in the third quarter for the Ethanol segment.

“Gasoline demand is up dramatically from the pandemic slowdown, and it’s expected to continue,” he said. “Tight old crop corn supplies and plant maintenance shutdowns are expected to slow industry production through the third quarter. The strong demand for co-products continues to support our overall margin. We continue to produce and sell our new high-protein feed products from both our Colwich, Kan., and our Denison, Iowa, plants at good margins. Our low CI efficient plants are well positioned to capitalize on higher co-product values and improved ethanol margins.”

The Andersons is still waiting on carb approval to shipments from its Colwich plant to California and expects to receive approval for it by the end of the third quarter.

The Plant Nutrient segment recorded a pretax income of $24 million, which compared with $19.4 million in the same period of 2020.

“The Plant Nutrient Group also had a strong second quarter,” Mr. Bowe said. “Its best since 2014. As anticipated, margins were up in all product lines on tight supplies and strong demand. Fertilizer prices remain high and orders for the fall are being placed.”

The company expects to see continued, growing demand in its Plant Nutrient segment.

“We expect our Plant Nutrient business to continue to perform well,” Mr. Bowe said. “Without the typical summer price reset and continued tight stocks, fall demand looks to be solid. Demand for our engineered granules and specialty liquids agricultural and industrial products has also been strong, and we expect that to trend on into the next year.”

The Rail segment benefited from high scrap steel prices, pushing its pretax income for the second quarter of 2021 to $3.1 million, which compared with $2.6 million in the same period a year ago.

“Rail reported slightly improved second-quarter results primarily on opportunistic scrapping of out of favor and end of economic life railcars for higher-than-normal scrap prices,” Mr. Bowe said.

Mr. Bowe indicated that the Rail segment is potentially rebounding in the industry.

“Use rail carloads are up significantly from a year ago, but still lower than 2019 volumes,” Mr. Bowe said. “Rates for lease renewals have sequentially increased but are lower than long-term lease rates. We continue to see a slow recovery in this industry. We have and will continue to opportunistically scrap idle and out of favor railcars when it makes good economic sense to do so.”

Dejar respuesta

Please enter your comment!
Please enter your name here