Drought effects limit profits at The Andersons

5/2/2003

The Andersons Inc., likely won't see high earnings for the first three quarters as the effects of last year's drought continues to plague its grain business, but wheat looks reasonable and spring planting is going well, the Maumee company's president and chief executive said yesterday.

“We're off to the best start that we've had in years,” Michael Anderson said after the company's annual shareholders meeting in Maumee.

At this point, with the growing season still ahead, the $1.1 billion company estimates earnings will be $1.15 to $1.30 a share this year, Mr. Anderson told shareholders. The company's agriculture group accounts for the largest single portion of the firm's profits, which last year totaled $13.3 million, or $1.79 a share.

A late-year surge on corn, yields for which were hampered by the drought, brought The Andersons' earnings up from an expected $1.30 to $1.40 a share, Mr. Anderson said. The drought's aftermath, though, also means the company won't get as much income from grain storage as previous years, he said.

This spring's favorable planting season, meanwhile, translates into more crop-fertilizer sales for the company, he explained. Grain, though, is just a part of The Andersons.

In the retail industry, competition is fierce, Mr. Anderson said. The company's stores typically have a loss in the first quarter - it was a little higher than expected at $2.6 million this year - and April sales are down 1 percent from a year ago, he said.

Another part of the company's business, manufacturing products like turf and landscape fertilizers, has not been doing well for three years. The firm is making strides toward returning it to profitability this year, Mr. Anderson said.

“We have turned around our processing unit quite a bit,” he told shareholders. “We're not out of the woods yet.”