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Published: Friday, 6/22/2007

Higher profit outlook boosts Andersons stock

BY MARK REITER
BLADE BUSINESS WRITER
Results from operations related to the corn-planting season were among factors leading to the new profit estimate. Results from operations related to the corn-planting season were among factors leading to the new profit estimate.
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Immediately after its profit forecast sprouted, The Andersons Inc. stock planted a $5.10 a share gain yesterday, with pleased investors engaged in heavy trading.

Fueling the 13 percent rise in share price to a close at $45.50 on the Nasdaq stock market was the Maumee firm's profit outlook issued Tuesday evening.

It said the expanding ethanol sector stimulated its revised profit expectation this year to a range of $2.80 to $3.05 a share, up from the previous predictions of $2.35 to $2.60 and as much as 50 percent higher than its $2.19 last year.

Solid results from company operations related to the recently completed corn-planting season, including fertilizers needed by farmers, entered into the new estimates, said Gary Smith, company treasurer.

Heather Jones, an analyst with BB&T Capital Markets, said the company generates income from the demand for ethanol as well as from grain storage and related activities.

"Andersons is different from most companies in the agricultural/ethanol space" said Ms. Jones. She increased her target stock price to $49 a share.

If the profit forecasts hold true, The Andersons is on pace to surpass last year's record-breaking earnings of $36.3 million on sales of $1.5 billion.

The new forecast resulted in 2.8 million shares of the stock trading yesterday, more than six times normal levels. The closing price was the highest since early May.

The company's main business is in grain, but it also sells fertilizer, has two ethanol-producing operations, fixes railroad cars, and operates general merchandise stores.

The ethanol plants use corn in a process to make E85, a vehicle fuel mix using 85 percent ethanol, a cheaper alternative to petroleum that can be used only in designated vehicles.

The Andersons' Albion, Mich., plant began production last year, and one in Clymers, Ind., began last month. The company has another under construction in Greenville, Ohio, and has plans for more. The plants give the company a double boost, by having the corn from farmers and by using the corn for ethanol production.

Nationally, dozens of ethanol plants have recently begun production or are under construction as motorists try to reduce the amount of foreign oil used. However, E85 gets fewer miles per gallon than traditional unleaded gas.

American farmers this year planted 90.5 million acres of corn, up 15 percent from last year, according to a March forecast issued by the U.S. Department of Agriculture.

Last year, ethanol production in the United States totaled 5 billion gallons, 1 billion more than 2005. The Agriculture Department estimates that production will increase to 10 billion gallons annually by 2009.

Contact Mark Reiter at:

markreiter@theblade.com

or 419-724-6096.



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