Winnipeg, Manitoba
March 2, 2007
Agricore United
(TSX:AU) announced today earnings before interest, taxes,
depreciation and amortization (“EBITDA”) of $8.3 million for the
quarter ending January 31, 2007. The $11.2 million increase over
the same period last year is largely the result of improved
operating results in all business segments. The company reported
a seasonal net loss of $14.9 million ($0.30 per share) for the
quarter, a $5.7 million improvement over the $20.6 million loss
($0.46 per share) for the same period in 2006.
“These improved first quarter
results are a true testament to the focus and commitment of the
entire Agricore
United team,” says Brian Hayward, Chief Executive Officer. “The
challenges of the past five years only made
us more determined to build this company into the strong entity
it is today.”
Grain shipments for the quarter
increased by 120,000 tonnes, and for the trailing twelve months
ended January 31, 2007, Agricore United held a market share of
33.1 percent, down marginally from the 33.6 percent market share
reported for its fiscal year ended October 31, 2006. Average
grain margin per tonne increased to $20.81 for the quarter
compared to $20.12 in 2006. At the same time, grain handling
expenses decreased by over $3 million or 8.2 percent, due mainly
to improvements in operating efficiencies. The company’s grain
inventory turn factor for the first quarter of 2007 was 9.0
times, 33 percent higher than the industry average of 6.7 times.
With the higher volumes, margins and reduced expenses, EBITDA in
the grain segment was a record $22.9 million for the quarter, an
improvement of over 49 percent from the same quarter last year.
Crop Production Services (“CPS”)
sales also increased slightly for the three month period, from
$51.1 million last year to $52.6 million at January 31, 2007,
due mainly to higher crop nutrition sales. Crop input sales for
this quarter typically represent less than 10 percent of the
company’s overall annual sales, with the third quarter
representing about 75 percent of sales. However, deferred sales
revenue, which represent prepaid sales not yet delivered to
customers, increased to $131.5 million at January 31, 2007, up
$36 million from the same time in 2006.
“Last year we saw an industry
phenomenon in crop nutrition with high product costs and lower
commodity prices which significantly reduced the application of
fertilizer,” says Hayward. “However, higher yields in 2006
resulted in a definite need to replenish soil nutrients, and
with the strong outlook for commodity prices in 2007, we’re
beginning to see producers respond through higher sales and
purchase commitments booked this quarter.”
Gross profit in the CPS segment
was up 7 percent in the first quarter, and together with reduced
operating expenses contributed to a $2.1 million improvement in
EBITDA for three months ended January 31, 2007, a 13.5 percent
improvement from the same quarter in 2006.
Agricore United’s Livestock
Services Division also delivered a record first quarter, with
feed volumes increasing by 154,000 tonnes during the quarter to
428,000 tonnes. Consequently, gross profit and net revenue in
this segment increased by more than 43 percent to $20.8 million.
The acquisition of Hi-Pro Feeds (“Hi-Pro”) contributed $7.3
million to the gross profit of the livestock segment in the most
recent quarter.
With additional operating expenses
associated with the Hi-Pro acquisition, overall segment EBITDA
was $7.5 million for the segment, an improvement of over 40
percent from the same period last year. Gross profit and net
revenue also increased by $74,000 in Agricore United’s Financial
Markets segment during the quarter. The company’s PRISM program
introduced in 2006, which offers producers a bundled product
offering with a risk management component, contributed $110,000
to the segment in the most recent quarter and is being offered
again to producers for the 2007 growing season.
Improved operating performance in
all segments, combined with an ongoing commitment to cost
control, contributed to an $11.2 million improvement in EBITDA
for the quarter. After expensing $2.8 million of costs for the
company’s legal, financial and shareholder communication costs
associated with the company’s response to the takeover proposal
initiated by Saskatchewan Wheat Pool on November 7, 2006, the
net loss of $14.9 million reflects an improvement of almost 28
percent over the prior year.
“Our concentrated efforts in cost
control and market development are truly contributing to the
bottom line of this company,” says Hayward. “Controlled
administrative costs, improved debt servicing costs, and
improved service and product offerings to farmer customers are
just a few of the measures that we are proud to have implemented
and are eager to build on.”
Agricore United is one of
Canada's leading agri-businesses with headquarters in Winnipeg,
Manitoba and extensive operations and distribution capabilities
across western Canada, as well as operations in the United
States and Japan. Agricore United uses its technology, services
and logistics expertise to leverage its network of facilities
and connect agricultural customers to domestic and international
customers and suppliers. The company's operations are
diversified into sales of crop inputs and services, grain
merchandising, livestock production services and financial
services. Agricore United's common shares are traded on the
Toronto Stock Exchange under the symbol "AU". |
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