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 DEKALB, Ill., Oct. 13 /PRNewswire/ -- DEKALB Genetics Corporation (NASDAQ-NMS: SEEDB) today reported net earnings of $3.1 million, or 59 cents per share, for the fiscal year ended Aug. 31, 1993. This compares unfavorably with $10.0 million, or $1.94 per share, earned in fiscal 1992. Revenues for the fiscal 1993 year declined nearly 3 percent to $291.5 million from $300.2 million the previous year.
 Losses associated with international subsidiaries in Spain and Australia were primarily responsible for the reduced earnings, accounting for 65 percent of the decline. (Without such losses, earnings would have been $1.47 per share). In addition, lower sorghum and corn volume in the United States reduced earnings for the company's domestic seed operation.
 For the fourth quarter, DEKALB reported a net loss of $3.0 million, or 58 cents per share, compared with net earnings of $300,000, or 6 cents per share, in the same period last year. Revenues for the three months fell 5 percent to $22.7 million from $24.0 million. During the fourth quarter, DEKALB took steps to reduce overhead, eliminating between $1.5 and $2.0 million in costs on an annual basis. Most of the resulting cost reductions were associated with dissolving the DEKALB Plant Genetics partnership and operating the seed business as a division of DEKALB Genetics Corporation.
 Seed Operations
 Pre-tax earnings for the seed operation during fiscal 1993 were $9.2 million, a significant decline from $19.6 million in 1992. Revenues slipped 4 percent to $224.5 million from $233.8 million during the prior year. Operating and exit losses in Spain were a major factor in lowering segment results. Spanish corn acreage and margins plunged during 1993, primarily because of changes in European Community policy, exacerbated by a major drought. DEKALB is now serving the market through a distributor.
 "Working with a local distributor is a much better way of approaching the Spanish market, which is no longer large enough to warrant our direct participation," said Bruce P. Bickner, DEKALB's chairman and chief executive officer. "Our operation in Spain had generated losses since 1989. Without this substantial drag on profits, we are confident that international seed results will improve next year."
 Similarly, DEKALB ended direct participation in Australia, where it incurred losses, Bickner said. The company is now working with a licensee, which will produce and market the seed locally.
 On a more positive note, DEKALB's Argentine operation achieved record earnings in fiscal 1993, the third consecutive year of earnings improvement. "As the leading corn marketer in Argentina, DEKALB has more than doubled sales volume in the past three years," Bickner said. "We are now making a substantial investment in our plant and equipment to continue supplying Argentine farmers with the highest quality seed."
 U.S. seed operations reported lower volume for both sorghum and corn, mostly because of acreage declines. Several factors reduced U.S. earnings from sorghum in 1993. Sorghum acreage fell almost 19 percent to 10.7 million acres. Some hybrids suffered frost damage during the 1992 growing season, which constrained the amount of saleable seed available to customers and resulted in some sorghum seed being sold at a reduced price. In addition, the crop shortfall resulted in unit costs which were 42 percent higher than the previous year.
 Corn acreage in 1993 is estimated at 73.7 million acres, down 7 percent from 79.3 million acres in 1992. "Our performance was both disappointing and frustrating," said Bickner. "We had expected the U.S. corn market to be somewhat smaller, but as the year went on, rains and flooding continued to reduce acreage along with our sales prospects. At the same time, we are frustrated because performance of DEKALB corn hybrids has improved greatly in recent years, and yet we have not succeeded in converting those performance gains into increased sales." The share of North American corn acreage planted to hybrids from DEKALB declined slightly in 1993.
 "The good news is that the U.S. corn market in 1994 is certain to be larger," Bickner said. "Because of forecasts for a much reduced harvest this fall, the U.S. Department of Agriculture has lowered acreage set- aside requirements to 5 percent next year from 10 percent this past year. We expect to increase our penetration of that larger market with corn hybrids that performed very well this past summer under a variety of stressful conditions."
 Sales of DEKALB's fast-growing U.S. soybean line were essentially flat in 1993, as was estimated U.S. acreage. However, soybean sales continued their upward trend east of the Mississippi River, where acreage was less affected by rains and flooding.
 Swine Operations
 The swine operation had fiscal 1993 pre-tax earnings of $3.0 million, down from $4.6 million reported in fiscal 1992. Revenues rose slightly to $45.1 million from $44.5 million in the prior year. Start-up costs for new production farms lowered pre-tax earnings. One farm was completed in 1993, while two others, now under construction, will begin contributing to sales in fiscal 1994. Earnings also were affected by soft market conditions that reduced profitability of the sales mix.
 "DEKALB Swine has just begun shipping a new line of swine breeding stock that further improves both the quantity and quality of lean meat," Bickner said. "Judging from the enthusiastic response of our customers, we expect these new products will make a major contribution to sales in fiscal 1994."
 Poultry Operations
 DEKALB Poultry Research recorded pre-tax earnings of $1.0 million for fiscal 1993, up modestly from $900,000 in 1992. Revenues were flat at $21.9 million.
 Export sales of breeding stock continued their upward trend in 1993, reporting their seventh consecutive record year. Export sales account for more than half of DEKALB Poultry's total genetic revenues.
 Based in DeKalb, Illinois, DEKALB Genetics Corporation is engaged in the research, production and marketing of agricultural seed, hybrid swine and egg-laying breeding stock. DEKALB Genetics Corporation Class B Common Stock is traded on the NASDAQ National Market System, under the symbol SEEDB.
 (In Millions, Except Per Share Amounts)
 Three Months Ended Year Ended
 8/31/93 8/31/92 8/31/93 8/31/92
 Operating Revenues $ 22.7 $ 24.0 $291.5 $300.2
 Earnings (Loss) Before
 Income Taxes (4.6) (0.4) 0.6 14.4
 Net Earnings (Loss) $(3.0) $0.3 $3.1 $10.0
 Net Earnings (Loss) Per Share
 Primary $(.58) $.06 $0.59 $1.94
 Dividends Declared Per Share .20 .20 .80 .80
 -0- 10/13/93
 /CONTACT: Thomas R. Rauman, chief financial officer of DEKALB, 815-758-9223/

CO: DEKALB Genetics Corporation ST: Illinois IN: AGR SU: ERN

DB-CP -- MN002 -- 1489 10/13/93 08:28 EDT
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Publication:PR Newswire
Date:Oct 13, 1993

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