Farmland Industries announced Tuesday its financial report for the first quarter of fiscal 2002 starting Sept.

Thursday, January 17, 2002

Farmland Industries announced Tuesday its financial report for the first quarter of fiscal 2002 starting Sept. 1 last year. Though the net income was below the same quarter last year, the refrigerated foods division, to which Farmland Foods meat products belong, showed a remarkable performance.

According to the report, the net loss in the first quarter was $3.2 million. In the same period last year the company had a $6.7 million net income. A total net loss in last fiscal year was $90 million.

Net sales also plunged to $2.3 million compared to last year, but this is due to the transfer of the company’s grain sales to a new company jointly established with Archer Daniels Midland.

The report emphasizes the recovery of refrigerated foods sector. That sector was one of Farmland’s most profitable, bringing in $21.5 million in net income, compared to $15.2 million in 2000 -&160;an increase of more than 41 percent.

Last fiscal year, the sector accounted for $4.75 billion in total sales and $18 million net income.

Farmland President and CEO Bob Honse said in a statement, &uot;The success of the Farmland Foods brand is evident in our financial results. While we continue to manage through adverse market conditions in the nitrogen fertilizer business, our refrigerated foods businesses had a significantly improved quarter, showing gains in both sales and income.&uot;

To overcome the negative market climate, the company has been implementing a comprehensive adjustment plan.

In the refrigerated foods sector, Farmland has been closing unprofitable plants while shifting its production to more value-added processed meats.

The company closed a plant in Dubuque, Iowa in June 2000 and another one in Carroll, Iowa last year.

After it lost its Albert Lea plant to fire in July, Farmland reopened the Carroll plant and arranged co-packing agreements with other meatpackers to make up the production loss.

The company said the cost associated with the co-packing cost is suppressing the profit, and the lost production in Albert Lea plant needs to be recovered.

After the fire, Farmland has already spent nearly $1 million on an engineering study to resume its operation in Albert Lea.

The city has been trying to press the company to make a decision by enforcing the demolition of the old plant. But the company has not changed its position that negotiations for insurance claims need to be cleared before the company goes ahead with new plant construction project that is estimated to cost about $80 million.