WINNIPEG, MANITOBA, CANADA — Ag Growth International Inc. (AGI) announced on May 12 that trade sales were at record levels in the quarter ended March 31 due to the carryover effect of record North American crop production volumes in 2014, higher international sales and the impact of a weaker Canadian dollar.
Total trade sales were C$94.4 million compared to C$86.1 million a year earlier. International sales were C$22.8 million compared to C$13.8 million in 2014.
The increase was largely due to increased activity in Russia/Ukraine/Kazakhstan (RUK) where sales of C$12 million accounted for 52% of AGI’s total international sales in the quarter (2014 - $7.2 million and 53%). Sales in RUK were largely related to a new port project in Ukraine with a multinational grain trader. Sales in Latin America of C$4.2 million accounted for 18% of total international sales and represents an increase of C$2.8 million over the prior year.
Strong Latin American sales were largely related to projects in Bolivia and Peru and to the recognition of revenue deferred from 2014. In addition to an increase in sales, AGI exited the first quarter of 2015 with a geographically diverse international backlog of C$32.7 million (2014 - C$24.5 million). The backlog at March 31, 2015 is comprised of RUK (57%) Latin America (25%) and rest of world (18%).
AGI reported a net loss of C$3.4 million or 26¢ per share compared to a net profit of C$1.2 million or 9¢ per share last year. The decrease was primarily the result of non-cash losses on foreign exchange that resulted from a significant decline in the value of the Canadian dollar vs. the U.S. dollar in the quarter, AGI said.
The non-cash losses relate primarily to translating certain U.S. dollar denominated balance sheet accounts, including long-term debt, into Canadian dollars at the rate of exchange in effect on the balance sheet debt.
AGI reported EBITDA of C$16.4 million compared to C$14.4 million in the same quarter a year earlier. Adjusted net profit was C$7.4 million compared to C$4.3 million in 2014.
“Our preseason on farm business was buoyed by back to back record corn crops in the U.S., leaving dealer inventory levels in need of replenishment”, said Gary Anderson, chief executive officer. “Commercial activity internationally made up for a more traditional start to the year in North America. We see international sales remaining robust while North American markets become watchful for evidence of a good crop. This behavior is being expressed through increased utilization of our portable grain handling warehouse inventory to bridge preseason and in-season demand. A recent uptick in North American commercial quoting activity is an encouraging sign that the slower start to the year was merely traditional seasonality and not suggestive of a longer term trend.
“Solid progress was made in the first quarter to advance development of our business in
Brazil. While we are keen to move forward, we are being diligent with training the team, refining the quoting process and pricing strategy, developing the manufacturing plan and determining best opportunities for both the short and long term. In April we participated in our first commercial and farm trade shows, formally launching our presence in the market. It is premature to offer metrics, but we were favorably impressed with the market’s response. We expect to see a modest level of activity by Q-4, with momentum building into 2016 and beyond.”