Kansas City, Mo. Changes made in the past year have Farmland Industries in position to return to profitability, the chief executive of the nation's largest agricultural cooperative said.
"We had more than a head cold, but we didn't have the fatal heart attack a lot of our detractors tried to make you believe we would," Bob Honse, Lawrence, told shareholders and employees during this week's annual meeting. "We are now back on track."
Honse said getting Farmland's finances in order meant reducing debt and expenses while expanding businesses and boosting cash flow.
Audited numbers aren't available yet, but Honse said Farmland had a profitable first quarter, which ended Nov. 30.
After taking an $80 million charge for restructuring, Farmland lost $90 million for the fiscal year that ended Aug. 31. That compared with a $29 million loss the previous year.
About 1,000 workers lost their jobs because of the restructuring, but 500 employees were added at Farmland's pork processing plants as the cooperative repositioned its meat business to take advantage of a growing market in meat that is cut and packaged for consumers, Honse said.
Farmland reduced its debt by $268 million in fiscal 2001 and administrative costs by nearly $40 million, Honse said, and intends to continue trimming debt and costs this year.
The cooperative already has seen the benefits of an improved balance sheet, Honse said, pointing to a five-year bank loan commitment after several years of loans guaranteed for only a year at a time.
Reducing debt has been Honse's primary goal since he became chief executive in September 2000.
The company has set up several joint ventures. It leased its domestic grain-handling business to Archer Daniels Midland in May, and last year it combined its feed business with Land O'Lakes.
Honse said Farmland had hired an investment banker to help it decide what to do with its petroleum refinery in Coffeyville. A deal to sell it fell through last month, he said.
Farmland idled its nitrogen plant in Lawrence earlier this year, forcing more than 70 employees out of work.