Market and product
US rail, ethanol fears send Andersons plunging
The group said that the US rail hiccups - caused by competition from record corn and soybean harvests with the likes of oil for wagon space - would offer some support to the performance of its rail business, in increasing demand for its 22,139 railcars and locomotives.
Utilisation rates, which rose to 89.9% in the July-to-September quarter from 86.2% a year before, could "reach levels in the mid-90s" next year, Mike Anderson, the group's chairman and chief executive, said.
Hal Reed, the Andersons chief operating officer, added that "we have constantly seen utilisation rates go higher. We expect that to continue.
"We have seen average lease rates go higher. We expect that to continue."
Rail threat
However, the group warned too that the US rail hiccups could hit its grain and ethanol businesses, which are bigger earners, and its fertilizer sales operations too.
"It should be noted that poor railroad service could impact the company in the fourth quarter," Mr Anderson told investors.
"Both grain and ethanol groups rely on outbound rail service to turn their inventory, which enables them to effectively serve the customers.
"Further, the plant nutrient group relies on inbound rail to ensure nutrients are available to meet customer needs."
Ethanol pullback
The company also, while forecasting record earnings for 2014, unveiled an unexpected drop in earnings for the July-to-September period, down 2.0% at $16.83m.
On a per-share basis, earnings fell $0.02 to $0.59, rather than rising to $0.76 as Wall Street had forecast.
And Mr Anderson signalled a drop in earnings ahead, saying that "we would not expected 2015 to be a record year", in part thanks to the retreat in ethanol margins from unusually high levels earlier in the year.
Indeed, ethanol profits, while doubling year on year to $21.25m in the latest quarter, were below the $33.90m achieved in the April-to-June period.
"Although we remain positive about the industry, the corn-based ethanol industry, we do not expect to continue to set earnings records in 2015," Mr Anderson said.
DDGs decline
The worsened prospects for ethanol were attributed largely to the market for the distillers grains (DDGs), manufactured as a byproduct of ethanol production, and used as a high protein feed ingredient.
The market for DDGs has been weakened in part by China's rejection of US exports of the product, amid concerns it could contain traces of a genetically modified corn variety yet to be approved by Beijing, but also by increased supplies from ramped-up ethanol production.
Mr Reed said: "A move in DDG prices from 110% on a sell-side value relative to corn price to something in the neighbourhood of 80% of corn value makes a notable change in the revenues for the DDG segment of the business."
Shares in The Andersons ended down 18.1% at $51.96 in New York.
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