Commodity Prices Spur Bruce Oakley Revenue Growth

by Mark Hengel  on Monday, May. 25, 2009 12:00 am  

It's not uncommon for a small company to double its revenue in one year. It's a bit tougher feat for a $500 million company.

Bruce Oakley Inc. of Little Rock managed to increase its fiscal 2008 revenue to $1.16 billion from $527 million in 2007, a one-year spike of 120 percent. The agriculture products and shipping company's fiscal year ends Sept. 30.

(To see the revenue growth of Bruce Oakley Inc. since fiscal 2003, click here.)

The 2008 increase is the company's largest single-year jump in recent memory, but the company has steadily grown its revenue since 2003. Revenue at Bruce Oakley Inc. has increased 550 percent during the past six years.

Dennis Oakley, the company's president, does not expect fiscal 2009's revenue to reach its 2008 high. Grain and fertilizer prices have fallen since the middle of last year, meaning Bruce Oakley Inc.'s 2009 revenue totals are lower. The high prices in 2008 resulted in a "freak" year of revenue growth, he said.

"It's a pretty simple deal," said Oakley, son of the late founder, Bruce Oakley. "The grain prices went wild and doubled. And fertilizer prices did likewise and more than doubled."

The rise in fertilizer and grain prices over the previous years, and especially in 2008, caused revenue to shoot skyward, though the company sold fewer fertilizer products in 2008 than the year before, Oakley said. Prices were high last spring, with fertilizer costing about $1,000 per ton, up considerably from its traditional price of $200 to $400 per ton, Oakley said.

Grain and fertilizer prices have fluctuated tremendously during the past decade, said Bobby Coats, a professor and economist at the University of Arkansas' Division of Agriculture. The prices reached highs in the spring and summer of 2008, he said. A supplier like Bruce Oakley Inc. could easily show substantial increases in revenue as the prices of its goods increased in value.

Bruce Oakley was "paying higher prices and they had to pass those prices along," Coats said.

Earlier this decade, grains and fertilizers cost much less. However, around 2005, a bull market caused commodity prices to rise and eventually reach 2008's record prices, Coats said. And with crop prices rising, the price of fertilizer followed.

After the record highs, "Prices fell off a cliff," Oakley said.

The price of fertilizer has now returned to the $200 to $400 per ton range, Oakley said.



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