Regina, Saskatchewan, Canada
September 10, 2008
A strong global agriculture sector
and robust commodity prices drove record high agri-product sales
for Viterra in the three
months ended July 31, 2008.
Increased demand throughout the Company's expanded network and
enhanced elevator efficiencies also drove third quarter net
earnings to $166.7 million ($0.71 earnings per share), up from
$98.5 million ($0.58 earnings per share) for the same period in
2007. For the nine months ended July 31, 2008, net earnings more
than doubled, growing by $125.8 million to $241.5 million ($1.13
earnings per share), compared to $115.7 million ($1.05 earnings
per share) for the nine months ended July 31, 2007.
Earnings before interest, taxes, amortization, gain (loss) on
disposal of assets, integration expenses and recovery of
(provision for) pension settlement ("EBITDA") for the three
months ended July 31, 2008 improved by $119.2 million to $272.6
million compared to $153.4 million in the same period of 2007.
EBITDA for the nine months ended July 31, 2008 more than doubled
to $432.3 million, compared to $203.5 million for the same
period of 2007. The Company's performance was driven by a
combination of continued strong grain margins, higher fertilizer
sales and margins and the incremental EBITDA earned from assets
acquired from Agricore United ("AU") in May 2007.
Cash flow provided by operations improved by $135.3 million to
$261.4 million ($1.12 per share) for the three months ended July
31, 2008, compared to $126.1 million ($0.74 per share) reported
in the same period of the prior year. For the nine months ended
July 31, 2008, cash flow provided by operations was $383.1
million ($1.79 per share), an increase of $210.6 million ($0.22
per share) over the same period of 2007.
"Our third quarter and year-to-date results are a testament to
our ability to maximize operational performance during a period
of strong agricultural industry fundamentals," said Viterra's
President and CEO Mayo Schmidt. "We continue to realize the
synergies from the AU acquisition ahead of schedule and have
created a stable and diverse platform to enable us to execute on
acquisitions and market opportunities. With the integration of
AU substantially complete, we have demonstrated our ability to
successfully export our expertise to other businesses. This will
be our continued focus going forward."
Financial Highlights:
Consolidated sales and
other operating revenues rose $0.8 billion to $2.2 billion
for the third quarter, up from $1.4 billion in same period
last year. On a year-to-date basis, consolidated sales and
other operating revenues were $5.1 billion, more than twice
the $2.2 billion reported for the nine months ended July 31,
2007.
Improved market share and stronger margins in the Grain
Handling and Marketing segment contributed $78.6 million of
EBITDA for the quarter and $229.2 million for the first nine
months on 2008. This compares to $63.3 million of EBITDA for
the third quarter of 2007 and $108.3 million of EBITDA for
the nine months ended July 31, 2007.
The Company continues to execute on expanded merchandising
opportunities and operational efficiencies, generating
year-to-date grain margins of $32.22 per tonne (after
excluding a $3.0 million one-time insurance recovery)
compared to $25.24 per tonne in 2007. Shipments during the
quarter were 3.7 million tonnes and 11.2 million tonnes for
the first nine months of 2008.
Sales and other operating revenues for the Agri-products
segment climbed $421.5 million to $1.0 billion for the
quarter ended July 31, 2008 and for the nine months rose
$616.4 million to $1.4 billion. This compares to the 2007
results of $588.3 million and $761.8 million respectively.
This
performance is largely due to the increase in fertilizer
volumes and prices, along with improvements in both seed and
crop protection products sales. Stronger worldwide demand
for agri-products drove margins in this segment and
contributed to an increase in EBITDA of $100.4 million for
the quarter ended July 31, 2008.
As at July 31, 2008, Viterra has achieved total synergies of
$87.3 million resulting from the successful acquisition and
integration of AU's operations with those of Saskatchewan
Wheat Pool. The integration of Viterra's Agri-products
network is complete and that business unit has exceeded its
estimates through the realization of additional revenue
generating opportunities. As a result, the Company now
expects gross synergies of $104 million with the full
benefit to be delivered by the middle of fiscal 2009.
Viterra's solid financial performance caused its
consolidated tax loss carry forwards at July 31, 2008 to
decline to $62.9 million from $183.2 million at the end of
April 2008. These tax losses are available to reduce income
taxes that are payable in future years. Based on current
expectations, management now believes that its tax loss
carry-forwards will be fully utilized by the end of fiscal
2009.
During the quarter Viterra successfully completed a common
share offering of 32.89 million shares, including an
over-allotment option exercised by the underwriters, and
raised a total of $441.5 million (net of underwriting fees
and estimated expenses). Viterra was also successful in
securing a $400 million, five-year term credit facility, of
which $232.0 million was used to repay the Company's
existing Bridge Facility. The balance of the proceeds raised
by the share and debt offerings will be used for general
corporate purposes, including the funding of future
acquisitions.
During the quarter, Viterra received investment grade
ratings from Dominion Bond Rating Services on its Senior
Unsecured Notes and Term Credit Facility. Standard and
Poor's upgraded its ratings on the Company's Senior
Unsecured Notes and Bank Credit Facility, with a positive
outlook.
"The agricultural environment is
presently robust, presenting Viterra with opportunities to grow
its business and drive additional value to shareholders," said
Schmidt. "We are being aggressive yet selective in our process,
applying rigorous strategic and financial metrics to each
significant opportunity."
Viterra will be hosting a conference call for interested parties
on September 10, 2008 at 1:45 p.m. Toronto time, 11:45 a.m.
Regina time to discuss its Third Quarter Financial Report.
Details are available on Viterra's website, under NewsRoom at
www.viterra.ca.
Viterra Inc. is Canada's leading agribusiness, with extensive
operations and distribution capabilities across Western Canada,
and with operations in the United States, Japan, and Singapore.
The Company is diversified into sales and services of crop
inputs and equipment, grain handling and marketing, livestock
feed and services, agri-food processing and financial products.
These operations are complemented by value-added businesses and
strategic alliances which allow Viterra to leverage its pivotal
position between Prairie farmers and destination customers. The
Company's common shares are listed on the Toronto Stock Exchange
under the symbol VT. |
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