Viterra sales fall 17.6%
Agricultural giant reports small loss in fourth quarter
Calgary — The Canadian Press Published on Thursday, Jan. 21, 2010 9:40AM EST
Major grain handler and fertilizer supplier Viterra Inc. (VT-T10.03-0.55-5.20%) fell to a small loss in the fourth quarter as revenue tumbled 17.6 per cent on a significant decline in commodity prices from record highs a year earlier and the impact of higher costs related to its expansion into the Australian market.
Viterra said Thursday its revenue in the quarter ended Oct. 31 was $1.4-billion, a stark contrast to a year-earlier $1.7-billion. It reported a small loss of $900,000 or less than a cent per share, compared with a profit of $46.8-million or 20 cents a share a year earlier.
Nevertheless, Viterra's president and chief executive described 2009 as a “defining year” for the company which, he said, is in solid financial condition and is prepared for future expansion.
“We completed the year as a more geographically diverse company, yet we maintained the financial stability that has become our hallmark,” Mayo Schmidt said in a statement.
Viterra retained more than $1-billion of cash and short-term investments and approximately $800-million is available for future growth initiatives, he added.
The company also announced plans to reduce the short-term debt of its Australian operations by $300-million before the end of this month with surplus cash.
“This action is expected to reduce the company's interest expense by approximately $1.3 million per month,” Mr. Schmidt told analysts in a conference call.
“This is a prudent course of action consistent with our global focus on operations and liquidity management.”
Several factors hit Viterra's profit in the fourth quarter, including a dramatic increase in financing expenses and higher costs related to the integration of acquired companies.
The company, renamed Viterra after Saskatchewan Wheat Pool bought Agricore United, incurred $5.1-million of integration costs during the quarter — more than double the $2.4-million recorded a year earlier.
Viterra said $2.3-million of the most recent quarter's integration costs were related to its recent acquisition of ABB Grain Ltd. in Australia and $2.8-million to Agricore.
In addition, financing expenses nearly quadrupled to $24.1-million, up from $6.3-million in the fourth quarter of 2008. The most recent quarter included additional interest expenses for $300-million of notes issued last July, $100-million drawn on a term facility and Viterra Australia's financing costs.
On the sales side, Viterra's sales and operating revenue from grain handling and marketing fell to $986.4-million, down nearly 17 per cent from $1.18-billion a year before.
Sales of agri-products fell even more dramatically, to $240.1-million from $308-million in the fourth quarter of fiscal 2008 — a 22-per-cent decline.
“With three year lows on fertilizer prices today, we expect growers will return to more normal fertilizer usage rates to replenish their soil nutrients for this coming year,” Mr. Schmidt said.
“How much price appreciation the industry will experience... is still dependent on global supply and demand fundamentals.”
He added that the company is optimistic about total grain production in Australia this year.
“Harvest will wind down by the end of January and we're very optimistic we will see a solid recovery in this business in fiscal 2010,” he said.
