Farmland records net loss of $90 million

Published 12:00 am Monday, December 17, 2001

Farmland Industries recorded a $90 million net loss in fiscal year 2001.

Monday, December 17, 2001

Farmland Industries recorded a $90 million net loss in fiscal year 2001. The company explains the deficit is due to restructuring efforts to strengthen the balance sheet. A comprehensive review of unprofitable operations is a core of the restructuring. But the lost production of the Albert Lea plant still needs to be recovered, according to the company.

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The financial status of fiscal year 2001 ending Aug. 31 was reported to the Securities and Exchange Commissions. The report indicates Farmland experienced a severe income shortfall for two consecutive years.

The company attributed the net loss, tripled from last year, to the $80 million restructuring charges.

&uot;These non-cash, non-recurring charges were for asset write-downs on plants we are no longer operating and for information systems that are no longer used by some of our businesses. Shutdown accruals for some plants were also included. They related largely to businesses other than refrigerated foods,&uot; the company said in a statement.

Kansas City-based Farmland is one of the largest cooperatives in the country. The business supplies fertilizer, petroleum and feed to member farmers, and processes and markets their products.

Lower crop and fertilizer prices and the higher cost for fuel hit all business segments. Though the petroleum branch increased its income, all other segments saw a decrease.

Farmland Foods, operator of the Albert Lea plant, is one of the company’s refrigerated foods components.

The sales of refrigerated foods increased $215 million from last year, while the income dropped $28 million.

The company explained the plunge in income was &uot;primarily the result of a management decision, based on a review of our refrigerated foods business, to close unprofitable meat facilities.&uot;

The company’s efforts to increase value-added products contributed to a higher unit-selling price, which pushed up the segment sales despite a shrinking sales volume.

The report referred to the loss of the Albert Lea plant, destroyed by a fire in July, saying, &uot;Our ability to supply product to our customers has not been significantly affected, as we moved some production to our other facilities and entered into co-packing arrangements.&uot;

But Farmland Foods President George Richter denied the current production shift to other facilities would be permanent.