“Normalized” grain margins and “weakened” fertilizer margins have weighed on the third-quarter bottom line for Canada’s largest grain firm.
Viterra on Friday posted net earnings of $120.69 million on $2.222 billion in revenues for its third quarter ending July 31, down from $166.71 million on $2.218 billion in the year-earlier period.
The Regina-based grain handler said it was “outperforming the industry” in grain shipments in its Q3 and year-to-date, but the results also “reflect normalized grain margins this year and the effect that weakened fertilizer margins have had on overall margins in (the company’s) agri-products segment.”
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Viterra’s Q3 grain handle was up over 26 per cent at 4.7 million tonnes, while its port terminal receipts were up 92.5 per cent, to 3.1 million tonnes
However, gross margins per tonne were $25.28 for its 2009 Q3, down from $34.47 per tonne in the year-earlier period, Viterra said.
Lower fertilizer margins in Q3 “reflect negative margin sales and very little in-season appreciation linked primarily to phosphate fertilizer,” Viterra said. “These factors, combined with lower margins on crop protection products, were the primary contributors” to the Q3 decline in net earnings.
The company’s year-to-date gross margins on agri-products already include a $28.1 million write-down on its fertilizer inventory, taken at Jan. 31.
Viterra’s food processing sales and other Q3 operating revenues, meanwhile, came in at $56.7 million, up $7.8 million from its 2008 Q3.
Much of that increase, Viterra said, reflects sales contributions from the Associated Proteins canola crushing facility. Viterra bought the southern Manitoba cold-press crush plant during its Q3.
“The significant impact of fertilizer markets worldwide were mitigated, to an extent, due to Viterra’s strong performance in its grain handling and marketing operations,” Viterra CEO Mayo Schmidt said Friday.
“In our new crop season, weather has played a role, with expectations of an average crop throughout the Prairies.”
The company this week picked up shareholder and Federal Court approval in Australia to complete its planned $1.4 billion merger with Adelaide-based ABB Grain.
Schmidt said Friday that “the completion of our Australian transaction will offer increased benefits of geographical diversity, an opportunity to level annual earnings and global logistics arbitrage.”
