Farmland Industries said Wednesday that it lost $37.1 million during the first nine months of its fiscal year, stung by closures of plants that process meat and wheat gluten.
But Bob Honse, president and chief executive officer, wasn't complaining. That's because the Kansas City, Mo.-based agribusiness giant also reported operational earnings of $27.1 million a $91 million improvement from the same period a year earlier.
"A pretty significant cost-cutting effort is beginning to bear fruit," Honse said. "It's kind of interesting. There's so little good news in the business world right now, and it's kinda fun to be with the company that is, in fact, making a turnaround."
Overall, Farmland reported its $37.1 million loss on sales of $9.2 billion. A year earlier, Farmland lost $11.6 million on sales of $8.8 billion.
Honse largely attributed the loss to Farmland's decision to record $79.8 million in one-time, nonrecurring charges during the third quarter. The charges included those involved with corporate restructuring; shutting down meat-processing plants in Dubuque, Iowa, and Carroll, Iowa; and closing a wheat gluten plant in Russell.
"We're very pleased," Honse said. "When you take these kinds of restructuring costs, the financial community the groups that rate companies view this as very positive. If we were a stock company, this would probably send our stock up, and not down. We're pleased where we are, and we're pleased with the progress we've made."
But the progress hasn't been enough to reopen Farmland's nitrogen fertilizer plant in Lawrence, Honse said. The plant has been closed since May, when 68 union employees were forced out of work.
Honse, a Lawrence resident who once managed the plant, said there fertilizer supplies remained too plentiful to justify resuming production at the plant, the cooperative's oldest.
"Since it's our most costly plant, it's usually the last one to come back on line," Honse said. "It's strictly a supply-and-demand decision."
Farmland's crop production division was one of two to report an improvement in earnings for the nine-month period. The division, which includes the Lawrence plant, lost of $3.4 million, compared with a loss of $44 million a year earlier.
Honse attributed much of the improvement to operations of a new fertilizer plant in Coffeyville. The plant uses petroleum coke as a raw material for production, rather than the more expensive natural gas used in Lawrence and at other plants.
Farmland's petroleum division recorded earnings of $57.4 million, up from a $1.1 million loss a year ago.
Thank high gasoline prices earlier this year for the boost, Honse said.
"Certainly anyone that has a petroleum refinery benefited from the high gasoline prices back in May," he said. "We, of course, like high-priced gas we're a refiner."
Other nine-month after-tax earnings for other divisions of Farmland, compared with a year earlier:
- Feed: lost $1.8 million, compared with earnings of $8.3 million.
- Refrigerated foods: $22.2 million, down from $33 million.
- World grain: lost $14.7 million, compared with a loss of $2.7 million.