Viterra reports third-quarter, nine-month profits

by World Grain Staff
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CALGARY, ALBERTA, CANADA — A solid shipping program through Viterra’s (TSX:VT) (ASX:VTA) South Australia grain operations, contributions from its North America pipeline and the addition of pasta manufacturing to its portfolio of assets led to increases in both revenue and gross profit for the third-quarter and first nine months of fiscal 2010, Viterra announced on Sept. 8.

Despite a considerable loss of seeded acreage in western Canada, Viterra's consolidated sales and other operating revenues were up C$273 million to C$2.5 billion in the third-quarter, bringing year-to-date revenues to C$6.3 billion, up C$1.1 billion relative to the first nine months of fiscal 2009.

President and Chief Executive Officer Mayo Schmidt said, "Our results this quarter are in line with our July 8 seeded acreage update. While spring conditions in Western Canada were far from ideal, yields on existing crops are encouraging. It is our view that given current yield projections from field staff, western Canadian production could be in the 44- to 45-million-tonne range compared to the 10-year average of approximately 49 to 50 million tonnes. In order to achieve these results, the Canadian Prairies will require frost-free days in September and good harvest conditions well into October.

"For the Australian business, strengthening commodity prices provided the foundation for growers to price and move their grain through the system, and we expect to see that continue over the next several quarters. Clearly our diversification strategy has worked to improve our risk profile and reduce our dependency on one geography."

The increase in consolidated sales for both the quarter and nine-month periods was primarily due to revenue contributions of C$558.5 million in the third-quarter and C$1.9 billion in the first nine months from Viterra Australia. The results were partially offset by lower third quarter Agri-products sales in North America.

EBITDA for the quarter was C$196.6 million, compared to C$204.5 million a year earlier, reflecting higher gross profits for the corporation, offset by operating general and administrative expenses associated with the Australian business and lower contributions from the North American agri-products operations. For the first nine months of fiscal 2010, Viterra generated EBITDA of C$379.6 million compared to C$283.5 million, a year earlier. The EBITDA increase of C$96.1 million on a year-to-date basis primarily reflects contributions from Viterra Australia, together with new contributions from Viterra's pasta operation during the quarter.

EBITDA from Viterra's North American operations was C$158.9 million for the third quarter and C$247 million for the first nine months of the fiscal year. The company's Australian operations contributed C$37.7 million in the third-quarter and C$132.6 million in the first nine months of the fiscal year.

Cash flow provided by operations for the quarter was C$162.2 million compared to C$178.8 million in the prior year's quarter and C$273.2 million for the first nine months of 2010, a 14.5% increase from the C$238.6 million generated in the first nine months of 2009.

Viterra's third-quarter net earnings were C$63.5 million, which compares to net earnings of C$120.7 million in the same three-month period of 2009. For the first nine months of this fiscal year, earnings were C$92.6 million, compared to C$114 million in the same period a year earlier. Results included one-time after-tax re-financing costs of C$17.7 million and approximately C$9.1 million of additional after-tax amortization costs that were recorded in the third quarter, the latter of which was associated with the purchase price allocation review of the Australian assets during the quarter.

"We look forward to fiscal 2011, as agriculture rebounds and we move beyond the cyclical lows experienced in 2009," Schmidt said. "Recent weather events around the globe, most notably in Russia and the Black Sea, have led to strengthening prices, placing us in a good position as we prepare for next year. Over the past several weeks, we have seen significant transaction activity within the industry as participants look to take advantage of growing consumer demand. Viterra's consolidation and expansion initiatives over the past three years allowed us to secure a foothold in leading countries of origin in advance of some of our competitors. Global agriculture has once again taken centre stage, driven by the solid long-term fundamentals that underpin the growth prospects for agricultural production and demand around the world."

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