Crystal’s profits drop by 32 percent but still near record highMOORHEAD, Minn. — American Crystal Sugar saw its net proceeds slump by almost a third for its 2012 reporting year, although it posted its second-highest payments to beet growers in history.
By: Patrick Springer, Forum Communications
MOORHEAD, Minn. — American Crystal Sugar saw its net proceeds slump by almost a third for its 2012 reporting year, although it posted its second-highest payments to beet growers in history.
American Crystal’s net proceeds for its 2012 fiscal year were $548.3 million, compared to a record-high $804.8 million for 2011, according to its annual report released Wednesday.
Although the crop for 2012 failed to reach the record levels of a year earlier, it still was a very good year, a company spokesman said.
The union representing locked-out plant workers, however, seized upon the results, saying rising costs and “sinking” profits reflected American Crystal’s struggles with replacement labor.
“They really had a tough time keeping the plants running,” said John Riskey, local president of the union representing 1,300 American Crystal workers locked out in a dispute since August 2011.
“There’s only so many days that those plants can run, and you have a lot of product to run through,” Riskey said.
Brian Ingulsrud, American Crystal’s vice president for administration, acknowledged that costs have risen with replacement labor, but said production still is running at high levels.
“The costs last year were higher, there’s no question about it,” he said.
But, he added: “Our factories are really running well this year. We’re setting numerous production records.”
The union also highlighted the compensation of David Berg, American Crystal’s chief executive officer, whose total compensation for 2012 was $1.7 million, including a salary of $653,775.
Berg’s total compensation for 2011 was $2.4 million, including a salary of $587,169.
Some highlights from the 2012 annual report:
-- Tons of sugar beets purchased dropped 16 percent, from 10,902 in 2011 to 9,158 in 2012.
-- The gross beet payment per ton was $58.67, the second-highest on record, compared to the record of $73 for 2011, a reduction of almost 20 percent.
-- As measured by acres harvested, beet payments were $1,212 per acre, the fourth-highest on record, compared to $1,923 in 2011, down 37 percent.
-- Net revenue was $1.48 billion, down 4.1 percent from $1.54 billion in 2011.
“While we didn’t deliver financial results to shareholders as high as we would have liked, we committed to strategic actions aimed at strengthening American Crystal’s competitive structure far into the future,” the report said.
The report noted the “labor interruption” since the company made its final contract offer July 28, 2011. Replacement workers staffed American Crystal plants during the past two harvest campaigns.
Members of the Bakery, Confectionery, Tobacco Workers and Grain Millers AFL-CIO have rejected the contract proposal four times, with 55 percent against it in the most recent vote on Saturday.
“We expect the current rate of spending associated with the lockout to decline,” the company said in recent filings with the Securities and Exchange Commission.
“However, if our strategy is not successful, the continued lockout or an unfavorable collective bargaining agreement may negatively impact our current and future financial performance and payments to our shareholders,” the company’s statement said in listing risk factors.
Company officials will comment on American Crystal’s 2012 results and future outlook in its annual meeting today. The union also plans a press conference.