Regina, Saskatchewan, Canada
June 10, 2009
Positive contributions from all
business segments during the quarter resulted in
Viterra (TSX:VT) generating
net income in line with last year's results. Consolidated net
earnings of $26.3 million ($0.11 per share), which included an
$8.0 million loss primarily related to the disposal of assets
for the quarter, compared to prior year net earnings of $33.6
million ($0.16 per share).
During the quarter, Viterra generated consolidated earnings
before interest, taxes, amortization, integration expenses and
gains on disposals of assets ("EBITDA" - see Non-GAAP Financial
Measures in Section 8) of $85.4 million, compared to EBITDA of
$78.5 million for the same quarter of 2008. For the six months
ended April 30, 2009, EBITDA was $79.0 million compared to
$159.8 million last year reflecting lower Agri-products EBITDA,
which included a fertilizer inventory write-down in the first
quarter.
"The second quarter results reflect our position within the
marketplace as Canada's leading agri-business. Given our
logistics capabilities and efficient infrastructure, we were
able to outperform the industry in terms of primary grain
shipments during the period. Margins are robust and we expect a
solid performance from our grain business for the remainder of
the year," said President and Chief Executive Officer, Mayo
Schmidt. "Agri-products sales gained momentum during the quarter
and we expect third quarter demand to strengthen. Our employees
and crop specialists are well prepared to meet the seasonally
strong buying requirements of farm customers during this very
busy period."
For the six-month period ended April 30, 2009, Viterra had a net
loss of $6.6 million ($0.03 per share) compared to net earnings
of $74.8 million ($0.37 per share) in the same six-month period
of 2008. The variance reflects the impact that the weakened
global economy had on fertilizer margins. Viterra's net earnings
for this year's first six months were $18.8 million ($0.08 per
share), excluding the $28.1 million inventory write-down taken
in the first quarter and the loss on disposal.
On May 19, 2009, Viterra announced that it had signed an
Implementation Agreement to combine its operations with
Australian-based ABB Grain Ltd. ("ABB"). Under the terms,
Viterra would acquire all the issued and outstanding shares of
ABB for $1.4 billion (Australian Dollar "AUD" $1.6 billion). The
offer is fully supported by both Boards of Directors and is
comprised of a combination of cash and shares, including a
special dividend to be paid by ABB (referred to herein as the
"ABB Transaction").
Mayo Schmidt said, "We believe this transaction with ABB will
drive significant value for all shareholders, destination
customers and growers. With demand for core commodities forecast
to increase by 20% over the next ten years, dual origination
from Australia and Canada is a significant competitive advantage
in serving this growing demand. We are creating a global leader
and supplier of key food ingredients and food production to the
world. The combined company will be financially stronger and
better able to access capital to meet the growing demands of the
international marketplace."
ABB will propose a Scheme of Arrangement for the acquisition of
its shares by Viterra. The transaction is subject to
satisfaction of a number of customary closing conditions,
including the receipt of required regulatory approvals and court
approvals, as well as the approval of ABB shareholders.
Also following the close of the quarter, Viterra successfully
completed the offering of $450 million in equity through a
bought deal subscription receipt offering by way of a private
placement to exempt purchasers. The proceeds of the offering
will provide a portion of the funding that may be required to
complete the ABB transaction. The price of the issue was $8.00
per subscription receipt. Each subscription receipt gives the
holder the right to receive, for no additional consideration,
one common share of Viterra upon the successful closing of the
ABB Transaction.
Financial and Operating Highlights:
- Consolidated sales and
other operating revenues climbed $82.7 million to $1.6
billion for the second quarter, up from $1.5 billion in the
same period last year. Higher sales led to stronger gross
margin and EBITDA for the quarter. On a year-to-date basis,
consolidated sales and other operating revenues were $3.0
billion, an increase of $0.2 billion over the $2.8 billion
reported for the six months ended April 30, 2008.
- Total shipments in the Grain Handling and Marketing
segment were up 36.7% over the prior year, contributing
$77.0 million of EBITDA for the quarter and $124.9 million
for the six months ended April 30, 2009. This compares to
$77.6 million of EBITDA for the second quarter of 2008 and
$150.6 million of EBITDA for the six months ended April 30,
2008.
- Grain handling margins were $27.22 per tonne for the
second quarter compared to $36.00 per tonne in the same
quarter a year ago. Year-to-date gross margins were $26.43
per tonne, in line with management's expectations.
- Sales and other operating revenue for the Agri-products
segment were $266.0 million for the second quarter of 2009
and $452.1 million for the six months ended April 30, 2009.
This compares to $202.5 million and $368.4 million for the
respective three and six-month periods of last year.
Stronger sales in both periods are a result of stronger
volumes in fertilizer, seed and equipment and higher
fertilizer prices relative to the same period last year.
EBITDA for the quarter was $15.4 million and for the six
months was a loss of $27.8 million, which compares to $12.3
million and $30.4 million respectively.
- Sales in the Agri-food Processing segment for the quarter
were $54.8 million, up $2.7 million from the comparable
period of 2008, reflecting higher average sales prices
offset partially by lower sales volumes. On a year-to-date
basis, sales were $103.2 million, up $8.0 million from the
comparable period of 2008. Segment EBITDA for the quarter
was $5.0 million, compared to $12.8 million for the same
period of the prior year. For the six months ended April 30,
2009, EBITDA was $7.5 million, compared to EBITDA of $13.5
million for the same period of the prior year.
- The Livestock Feed and Services segment generated feed
sales of $173.6 million for the three months ended April 30,
2009, which compares to $123.8 million in the comparable
period of 2008. The increase is primarily due to the
contributions from feed manufacturing plants that Viterra
acquired during fiscal 2008. Segment EBITDA for the quarter
was $4.6 million, compared to an EBITDA loss of $3.1 million
for the same period of the prior year. For the six months
ended April 30, 2009, EBITDA was $13.8 million, compared to
$2.3 million last year.
- For Viterra's Financial Products segment, second quarter
and year-to-date EBITDA was $2.8 million and $4.9 million,
respectively compared to EBITDA of $0.8 million and $1.9
million for the respective periods of 2008.
- Corporate expenses decreased by $2.5 million from the same
three-month period last year, a reflection of lower accruals
for the Company's incentive plans as well as lower capital
taxes, partially offset by an unrealized foreign exchange
marked-to-market loss of $0.8 million and higher external
consulting fees required to support growth initiatives.
Year-to-date, corporate expenses were up $5.4 million,
reflecting an increase to the directors' compensation
program and higher external consulting fees.
Based on Viterra's projections,
fiscal 2009 industry receipts are estimated to be between 34 and
35 million tonnes, the highest level experienced in the past 10
years and well above the 31 to 33 million tonne average. The
Company anticipates strong demand and deliveries for the
remainder of the fiscal year. Farm incomes were up approximately
63% from 2007 and grain prices have been relatively strong when
compared to historical averages. Both factors have been positive
for the Agri-products segment and are reflected in continued
strong demand for crop inputs this spring.
Viterra Inc. is Canada's leading agribusiness, with extensive
operations and distribution capabilities across Western Canada,
and with operations in the United States, Japan, Singapore and
Geneva. 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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