MGP Ingredients posts quarterly net loss

By Bryan Sims | November 03, 2008
Web exclusive posted Nov. 17, 2008 at 11:47 a.m. CST

Atchison, Kan.-based MGP Ingredients Inc., a diversified agricultural products company, reported a net loss of $17.2 million for its first quarter of fiscal year 2009 ending Sept. 30, compared with a net loss of $353,000 in its first quarter of fiscal year 2008.

The company, which owns and operates two ethanol plants, a 4 MMgy facility in Atchison, Kan., and a 78 MMgy plant in Pekin, Ill., saw a 16 percent decline in ethanol sales compared to its first quarter during fiscal year 2008. That decline was a result of reduced production levels partially offset by improved pricing. Despite the decline, the company said that total ethanol sales for the first quarter 2009 increased $7million.

Higher-than-expected corn prices also cut into the company's ethanol segment where its cost of corn, before adjustments related to hedging, was approximately 49 percent higher than a year ago.

"Our first quarter looked very similar to our recent fourth quarter, excluding special items," said Tim Newkirk, president and chief executive officer of MGP Ingredients. "The main culprit again was continuing high prices for our principal raw materials, wheat and corn."

Recently, MGP Ingredients announced that it had shut down its protein and starch operations in Pekin, Ill., and its flour mill operations in Atchison, Kan., while reducing its workforce. MGP Ingredients said the moves would help it "to move forward with strategic initiatives to transform the company into a leading provider of value-added ingredients and world class alcohol products."

In connection with the shutdown of its flour and protein mill operations, MGP Ingredients said in its earning statement, that while it still continues to optimize production at its Pekin ethanol plant, it also intends to curtail ethanol production at that facility "until market conditions become more favorable" because "market economics for fuel alcohol have continued to erode, with recent prices being at or below production cost."