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Ag input sales boost Viterra’s Q3

“Favourable weather” on the Prairies during Viterra’s third fiscal quarter helped spur a substantial rise in farmers’ spending with the grain giant on fertilizer and other ag inputs.

The Calgary-based grain handler on Wednesday booked a profit of $123.25 million on $3.554 billion in sales and other revenues for its third quarter ending July 31, almost double the $65.54 million profit on its $2.493 billion gross in the year-earlier period.

The company reported higher Q3 revenues in all three of its business segments, with earnings before interest, taxes, depreciation and amortization (EBITDA) in agri-products up about 50 per cent per cent to $162 million due to “robust fertilizer contributions” and to late seeding in North America, which pushed earnings normally seen in Q2 into Q3.

High commodity prices and “increased nutrient requirements” due to excess moisture in 2010 and 2011 spurred farmers to “maximize” their fertilizer applications, which in turn boosted Viterra’s North American fertilizer sales volumes by 26 per cent for the quarter, the company said. Sales volumes in Viterra’s Australian fertilizer business were up 20 per cent.

In the company’s grain handling and marketing segment, EBITDA was up slightly at $104 million due mainly to “record receivals, shipments and additional storage and handling revenues” in the company’s Australian business.

Grain handling and marketing margins were also up in the company’s North American business on “increased merchandising and blending opportunities” as well as additional sales of pulse crops and higher earnings throughout the company’s grain elevator chain.

“Short-term challenges”

Viterra also booked higher EBITDA of $29 million in Q3 from its processing segment, with much of the increase coming from the company’s new U.S. oat processing business (formerly 21st Century Grain Processing, which it bought in late fiscal 2010) and stronger margins from its pasta plant in North Dakota.

Those revenues were partly offset by “weaker results” from Viterra’s canola processing and feed operations, due to “short-term challenges in both of these industries,” the company said.

Looking ahead, Viterra said it “remains optimistic that the industry will see relatively strong volumes through the remaining portion of the fiscal year and into fiscal 2012, particularly if weather conditions are favourable into the fall.”

Viterra said Wednesday it’s still too early to quantify how the federal government’s plans to remove the Canadian Wheat Board’s single marketing desk for Prairie wheat and barley by next summer will affect the company’s revenues.

However, the company said it’s “supportive” of the government’s direction on the CWB file.

In its Australian operations, Viterra is still working on renewing its accreditation from Wheat Exports Australia and has submitted changes to its access undertaking in response to feedback from the Australian Competition and Consumer Commission.

The company’s current accreditation and undertaking both expire at the end of this month. Viterra will need both to be renewed so it can continue to export bulk wheat out of Australia and operate its port terminals.

The company said it “remains confident” it will get both renewals, which if granted will run to Sept. 30, 2014.

Related stories:

Australians weigh Viterra plan for port access, Aug. 20, 2011

Viterra sheds bipolar operating model, Aug. 8, 2011

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