MINNEAPOLIS, MINNESOTA, US — Lower trading opportunities across core commodities held down earnings and sales at Ceres Global Ag Corp. in the second quarter.
Ceres sustained a loss of $1.27 million in the second quarter ended Dec. 31, 2022, which compared with income of $4.03 million, equal to 13¢ per share on the common stock, in the same period a year ago — a period that Ceres has described as one of its most profitable in the history of the company. Adjusted EBITDA in the quarter totaled $2.23 million, which compared with $23.93 million in the same period a year ago. Revenues fell 7% to $283.03 million from $304.8 million.
In the six months ended Dec. 31, 2022, Ceres posted a loss of $4.86 million, which compared with net income or $12.8 million, or 42¢ per share, in the same period a year ago. Adjusted EBITDA totaled $2.45 million, down from $8.52 million in the same period a year ago. Revenues in the six months totaled $543.14 million, up 5.8% from $513.17 million.
Ceres handled and traded 29.6 million bushels in the second quarter, up 14% from 25.9 million bushels a year ago.
“In Q1 of this year, US Northern Plains and Canadian Prairies’ grain stocks were extremely low, resulting in lower volumes handled for the corporation,” Carlos Esteban Paz, president and chief executive officer, said during a Feb. 14 conference call with analysts. “However, pipelines were replenished this quarter and neutral volumes — commercial channels.
“In the Grain segment, our success was driven by a combination of solid analysis of markets despite volatility while maximizing the volume pull through our asset network. We effectively traded and positioned our respective product lines, and the diversity of our products and assets (healed) the business from many of the market headwinds. Despite extreme weather negatively affecting regional railroad performance, which caused volumes handled to be lower than initially expected, year-to-date grain volumes handled were on par with last year and 11% higher than Q1. Ceres effectively utilized this terminal asset footprint to ensure that customers receive their products on time.”
Paz said soybean crush volumes were similar to the second quarter of fiscal 2022, but fell just short of targeted capacity.
“While the operational issues we experienced last quarter at the Jordan Mills crush plant improved significantly, we continued to make operational adjustments to ensure we are able to keep up with demand for soybean oil and meal,” he said.
Looking ahead to the second half of fiscal 2023, Paz said he believes markets will remain erratic and volatile due to the ongoing conflict in Ukraine.
“Nevertheless, we expect trading opportunities to continue to present themselves,” he said. “Thanks to our loyal customer base and our team’s ability to trade and position as we manage our supply chains, we are confident in our ability to capitalize on the spring and summer volumes merchandise. The ag markets will soon shift their focus to North American spring planting, and our team will be monitoring weather and planting decisions to see how these crops evolve. Through our ability to execute on solid analysis, we expect to identify opportunities early and capitalize on them.”
On the oilseed side, he said Ceres expects soybean supply to remain steady, enabling the company’s Jordan Mills crushing plant to cause a high utilization rate and realize adequate margins during the latter part of the winter season.
“The continued demand for oil will also allow us to grow and capitalize on the US renewable and biodiesel markets opened last quarter,” he said.