The Japanese parent company of Gavilon hasn’t hidden its disappointment in the weak performance of the Omaha-based grain trading giant.
Marubeni Chief Executive Fumiya Kokubu warned of his disappointment in Gavilon and his intent to slice like a knife when speaking with investors this month.
“Gavilon continues to experience difficulty,” Kokubu said, according to a transcript of Marubeni’s third-fiscal-quarter conference call available on Bloomberg. “So we will be taking dramatic measures.”
Some of those measures came to pass Friday, when Gavilon said its chief executive, chief operating officer and the head of its North American grain division are gone.
A new chief executive will start working for the company Tuesday, Gavilon said, moving soon to Omaha from Portland, Oregon.
Lewis Batchelder will succeed Jim Anderson as chief executive. Chris Faust is being promoted to vice president and general manager of the grain division; Greg Konsor previously was head of the division. And Chief Operating Officer John Neppl won’t be replaced immediately, said Gavilon spokesman Patrick Burke.
The company gave no reasons for the change. The former executives and new appointees either weren’t available to comment or didn’t return calls from The World-Herald. Gavilon employs 375 people in Omaha.
In a statement, Batchelder said he is “excited to begin my role as CEO of Gavilon. I welcome the opportunity to join a company with Gavilon’s strong financial position, the support of its parent company Marubeni Corporation and its dedicated suppliers and customers.”
He said the “day-to-day operations” of the company would not change.
The executive shake-up comes as Gavilon’s parent company has been weighed down by its Omaha unit’s performance: Last May Marubeni attributed its 50 percent profit decline from 2013 to 2014 to worse-than-expected results in oil and grain trading.
Those results prompted Marubeni to write down — by about $419 million — the value of Gavilon, which it bought from Omaha-based ConAgra Foods for $2.7 billion in 2013.
Stock analysts who cover Marubeni at JPMorgan flagged “concerns” in December about Gavilon’s performance.
The May performance report was bad enough to trigger pay cuts of 50 percent for Gavilon’s chairman and chief executive and 30 percent for Marubeni’s other senior executives.
Todd Hultman, a market analyst for the agricultural news service DTN in Omaha, said grain trading volume has been low in the past year because of flat grain prices.
“There’s just not a lot of volatility for trading to take place,” Hultman said. “You’re looking at a very dead market for the last six months.”
Generally speaking, the less trading activity, the less opportunity for Gavilon to make money.
Parent Marubeni’s stock is down about 21 percent on the Tokyo stock exchange in the past year. It fell 1.15 percent Friday on a day when the broader Tokyo market was up modestly. Marubeni is a conglomerate that includes businesses in food, consumer products, agriculture, chemicals and industrial machinery.
Hultman said Gavilon’s executive change also may be influenced by the dynamics between the Omaha company and its Tokyo-based parent. “Sometimes it takes awhile to get comfortable in those new relationships,” he said.
Batchelder, the new CEO, has been working as a consultant and has more than 40 years of experience in the commodities business. He previously had been senior vice president for agriculture services at Archer Daniels Midland Co. and chairman of Alfred C. Toepfer International, a global merchandiser of agricultural commodities and processed products.
He will work out of the company’s headquarters in Omaha, said Burke, the Gavilon spokesman.
Gavilon said Batchelder’s “long-standing relationship” with Marubeni “will be instrumental in building on Gavilon’s success while also shaping the future path for growth of the company within Marubeni’s group-wide business strategy.”
Burke said Faust, formerly regional vice president for the grain division, “has vast experience with all of our operations and our facilities and great relationships within the company.”
Anderson moved from chief operating officer to CEO in October 2014, succeeding Greg Heckman. Anderson had joined the company in 2010 after being CEO and director at United Malt Holdings, an Australian grain company. Before that he spent 11 years in senior management roles at ConAgra, where he met Heckman.
Heckman had a 30-year career with Gavilon and with ConAgra, which spun off the grain-trading division as a separate business in 2008 and sold it to a group of investment funds and Gavilon management for $2.8 billion.
The company began in business in 1874 as the Peavey Co. with a grain elevator in Sioux City, Iowa, and later moved to Minneapolis. ConAgra bought Peavey in 1982 and moved its 100-person trading group to Omaha in 1998.
Gavilon has about 1,900 employees and nearly 300 facilities and offices around the world. Its businesses include trading grain, fertilizer, natural gas and petroleum; and logistics, including storage and transportation of commodities on six continents.