Company took steps throughout year, especially the fourth quarter, to improve earnings.
Revenue for the year was $3.924 billion, down slightly from $4.198 billion the same time last year.
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| Pat Bowe |
For the full year, the Grain Group sustained a loss of $15.7 million, which compared with $13.9 million in adjusted pretax income realized in the same period last year. The company’s 2015 results included a $46.4 million pretax charge for impairment of goodwill as well as a $23.1 million pretax gain recognized as the result of a partial redemption and related dilution of the company’s ownership stake in Lansing Trade Group.
In the fourth quarter of 2016, the company said its Grain Group began to take advantage of improved crop conditions in the Eastern Corn Belt and benefited from shedding underperforming assets. In May 2016, The Andersons completed the sale of eight of its facilities in Iowa, U.S., to MaxYield Cooperative of West Bend, Iowa, U.S.
Overall, grain production in the Eastern Corn Belt rebounded from last year with bushel increases across all grains in key draw areas, the company said. Bean yields were strong and corn production in the group's footprint was substantially better in 2016.
The Grain Group estimates that growers will plant 90 million acres to 93 million acres of corn in 2017, slightly below the 94 million acres planted in 2016. Soybean planted acres are expected to be 87 million to 90 million, compared to 83 million acres planted last year. Total wheat acres planted have been reported to be approximately 50 million in 2016 compared to 55 million in 2015. Planting and growing conditions and crop yields that are comparable to those of 2016 should create more opportunity for the Grain Group to sustain its recovery.
The Ethanol Groups full year pre-tax income of $24.7 million fell slightly from $28.5 million last year. The company said it delivered a second consecutive annual production record in 2016. The ethanol joint ventures produced 387 million gallons compared to 384 million gallons in 2015.
Margins on co-products were under pressure in the fourth quarter as localized problems with vomitoxin and lower international demand, particularly as a result of Chinese tariffs, put pressure on distillers dried grain (DDG) pricing. In November 2016, the company put out a notice it would be testing every load of corn for vomitxoxin at its Clymers ethanol plant and grain elevator in Logansport, Indiana, U.S.
Construction is nearing completion to expand the ethanol production facility in Albion, Michigan, U.S. This expansion will double the production of the facility to 130 million gallons a year and will be running at full capacity by the end of the second quarter of 2017.
The Rail Group earned pretax income of $32.428 million in 2016, which compared with $50.681 million in 2015. Almost two-thirds of the full-year variance resulted from an $11.7 million decrease in early lease termination income, which was unusually high in 2015. The remaining difference was primarily the result of utilization rates that softened throughout 2016. Full year 2016 base leasing pretax income was $13.2 million, down from $31.5 million in 2015, including the unusual early lease termination income.
As 2017 begins, railroad shipping volumes have shown early signs of improvement after a difficult operating environment in 2016, The Andersons said. The Rail Group's lease and car portfolio positions it well to manage the rail cycle with a highly diverse customer base that represents a wide spectrum of industries.
“We are pleased with the results turned in by our Rail and Ethanol groups,” Bowe said. “Our Grain Group is showing signs of rebounding after an improved harvest in the Eastern Corn Belt. With fertilizer prices stabilizing, we have begun to see signs of recovery as farmers get positioned for spring application and planting. We remain confident in our ability to grow our business and deliver improved results in 2017.”
