Penford sustains $22 million loss in Q2

by Eric Schroeder
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CENTENNIAL, COLO. — Strong year-over-year results for North American Food Ingredients were not enough to boost overall results for Penford Corp., which suffered a loss of $22,178,000 in the second quarter ended Feb. 28. The loss compared with net income of $2,315,000 in the same period a year ago. The most recent quarter included a goodwill impairment charge of $13,828,000.

Sales for the second quarter were $79,808,000, down 9% from $87,889,000. Penford said the decline in sales reflected the impact from lower Australian foreign currency exchange rates, reduced demand for industrial starches serving paper markets and volume changes in the Australian operations.

"The company’s business model, which emphasizes products that deliver customer solutions through functionality and cost-in-use performance, is sound and is reinforced by the continuing solid results in our North America Food segment," said Tom Malkoski, president and chief executive officer. "However, the severe economic downturn has greatly impacted our Industrial segment. This business had limited time to adjust to the abrupt erosion of paper customer demand during the quarter caused by sharply reduced consumption of our customers’ products and inventory de-stocking. In addition, ethanol margins were compressed due to sharply lower fuel prices."

For the second quarter, the Industrial Ingredients segment sustained a loss of $6,652,000, which compared with operating income of $4,568,000 during the same period a year ago. Sales for the year were $47,315,000, down 4% from $49,076,000 during the previous year.

The Food Ingredients – North America segment had operating income of $2,813,000, up 27% from $2,207,000 during the previous year. Sales for the segment were $16,623,000, up from $15,642,000 during the previous year.

The Australia/New Zealand segment had a loss of $16,787,000 for the second quarter, which compared with a loss of $2,045,000 during the same period a year ago. Sales for the segment were $16,068,000, down 32% from $23,458,000 during the previous year.

For the first six months of fiscal 2009, Penford sustained a loss of $22,547,000, which compared with income of $5,477,000 in the same period a year ago. Sales in the first half were $160,499,000, down 12% from $182,750,000.

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