Viterra annual earnings up 36%

by World Grain Staff
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CALGARY, ALBERTA, CANADA — Viterra Inc. announced on Jan. 18 record financial results for the year ended Oct. 31, 2011, which it attributed to strong contributions from its agri-products operations, higher volumes for the Australian grain handling and marketing operations and a solid performance from the processing operations.

For the year, Viterra generated EBITDA of C$702 million, a 36% increase over the prior year, as all three business segments increased sales revenue and gross profit contributions relative to fiscal 2010. Agri-products' EBITDA increased 59% on strong fertilizer volumes and pricing.

Fertilizer margins averaged C$133.53 per tonne for fiscal 2011 compared to C$97.36 per tonne in the prior year. Grain Handling and Marketing's EBITDA rose 28% due to record grain receipts and shipments in Australia and strong results from North American Grain. The consolidated global pipeline margin for fiscal 2011 increased to C$37.11 per tonne compared to C$32.83 per tonne in fiscal 2010. Processing's EBITDA increased 19%, reflecting the new pasta and oat businesses acquired in the latter half of fiscal 2010 and a combined food processing margin of C$116.94 per tonne versus C$101.85 per tonne last year.

Viterra's net earnings for the year rose 83% to C$265 million compared to C$145 million in fiscal 2010 while earnings per share increased to C71¢ from C39¢.

"The past year was very strong for Viterra as we demonstrated the value of our global reach, influence and expertise to deliver record financial results in a challenging economic environment," said Mayo Schmidt, Viterra's president and chief executive officer. "Looking forward, we are optimistic as strong long-term global demand fundamentals continue to support the agricultural industry. While the current economic environment is challenging, Viterra has an enviable position in this global market, a vertically integrated business model, excellent assets in key growing regions, and an efficient global marketing network all supported by a strong liquidity position. We are focused on improving our return on assets to drive earnings per share performance and our results demonstrate this. Given the confidence in our business model and strategy to generate future earnings, we have increased our dividend by 50."

The board of directors approved a 50% increase in Viterra's dividend rate to C15¢ per share per year compared to the previous rate of C10¢ per share. In conjunction with this new dividend rate, the board declared the first semi-annual cash dividend for the year of C0.075¢ payable Feb. 22, to shareholders of record on Jan. 30, 2012. The board will continue to review the dividend semi-annually, taking into account the company's cash flow, earnings, financial position and other relevant factors.

For the fourth quarter, Viterra generated C$3.1 billion in sales and other operating revenues representing an increase of C$1.1 billion or 57% from the fourth quarter of fiscal 2010. The increase was primarily attributable to higher commodity prices, which increased Grain Handling and Marketing's revenues. Revenues from Agri-products also increased due to favorable weather in Western Canada that resulted in a successful fall fertilizer application season. Both fertilizer volumes and pricing increased in the fourth quarter of fiscal 2011 compared to the same period last year.

Gross profit contributions for the fourth quarter totaled C$327 million, a slight increase from C$320 million a year earlier. Strong fertilizer sales volumes and pricing increased quarterly gross profit $33 million year-over-year; however, this increase was partially offset by lower contributions from the International Grain group and lower malt and pasta margins.

Net earnings for the fourth quarter of fiscal 2011 were C$9 million or C3¢ per share compared to C$53 million or C14¢ per share last year due to lower EBITDA, non-recurring impairment and asset disposal losses and higher income taxes. During the quarter, Viterra recorded a goodwill impairment of C$8 million for the western Canadian feed operations, reflecting the continued intense competition and overcapacity in the feed market. Asset disposal losses totaled C$1 million for the quarter compared to a gain of C$7 million in 2010 when the company sold one of its North American grain facilities. The effective income tax rate for the quarter was 36% compared to 18% in the fourth quarter of 2010 due to losses incurred during the current quarter for which no tax asset was recorded. On a yearly basis, the effective tax rate was 28% compared to 23% in fiscal 2010 as proportionately more income was earned in higher tax jurisdictions.







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