Andersons crush margins to drop after record 4Q

US agribusiness conglomerate The Andersons posted record fourth-quarter profit in its renewables business but expects a seasonally weak first quarter for ethanol crush margins.

Pretax profit in the renewables business rose to $33mn in the fourth quarter, up from $13mn a year earlier, driven by record production and improved yields at the company's four ethanol plants, chief executive Patrick Bowe said Wednesday on a conference call.

"Much improved" ethanol crush margins in the fourth quarter have narrowed in the current quarter on seasonally weak demand, which is typical for the business, Bowe said. Crush margins may improve starting in the second quarter on industry maintenance shutdowns and seasonally higher driving demand in the spring, he said.

The renewable diesel feedstocks business contributed to profit growth in the fourth quarter and full year, and the company is looking to accelerate gains with an acquisition, particularly a producer of lower carbon intensity (CI) feedstocks.

The Andersons is weighing investments that would reduce the CI of ethanol production, including carbon sequestration for the company's three ethanol plants in the eastern US, where the geology is favorable, Bowe said. Producing lower CI ethanol would allow the company to produce sustainable aviation fuel (SAF) from ethanol, he said.

"There really isn't any ethanol-to-jet without low carbon ethanol," Bowe said. "And that's what we're really focused on is making sure that we're able to participate in that market when it happens."

By Matthew Cope