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Winnipeg, Manitoba
July 30, 2001
In light of the recent
announcement concerning the proposed merger with Agricore
Cooperative Ltd., UGG today
released interim results for the 11 months ended June 30, 2001.
UGG reported strong results for the first two months of its
fiscal 2001 fourth quarter. Notwithstanding drought conditions
in Saskatchewan and Southern Alberta, net income for the
two-month period was $10.1 million - 32% ahead of last year.
Cash flow of $15.9 million for the two month period was also
strong, surpassing the same period last year by 45%.
Despite this relative improvement, UGG's results have been
negatively impacted by external factors. Poor weather conditions
on much of the prairies have limited growth in crop input sales
and exerted downward pressure on prices resulting in lower than
usual margins, particularly on seed and chemical. An almost 25%
decline in canola acres this year has also negatively impacted
seed sales and earnings.
Crop Production Services gross profit for the two-month period
declined by $1.0 million as a result. Through eleven months,
Crop Production Services operating income of $7.6 million
declined 16% from $9.1 million for the same period of the
preceding fiscal year.
Grain Operations continued to demonstrate relatively strong
performance over the eleven months.
Year-to-date operating income of $25.2 million was $7.8 million
ahead of last year. This improvement, on similar volumes to last
year, is due mainly to the factors referred to in the third
quarter report - a 5% expense reduction and margin improvements
with effective execution of sales programs.
Livestock Services year-to-date operating income of $10.8
million was 19% ahead of the prior year. For the first two
months of the fourth quarter, operating income of $3.2 million
was well ahead of the last year's $1.8 million - with ongoing
benefits from UGG's new feed mill at Olds, Alberta; the recent
acquisition of assets of Pro Form Feeds of Chilliwack, British
Columbia; and UGG's investment in Puratone.
Farm Business Communications year-to-date results continue to
run slightly behind last year, due to weakness in advertising
markets.
Despite the recent soft market for farm inputs, UGG's gross
profit for the eleven months increased by 4.5% to $196 million.
Expenses increased by less than 1% notwithstanding the impact of
the Pro Form Feeds acquisition. Earnings before interest, taxes
and depreciation (EBITDA) were $53.0 million through eleven
months of the fiscal year - up 17% from fiscal 2000. For the
two-month period, EBITDA was ahead $3 million at $25.3 million.
Cash flow from operations was also stronger for both the
two-month and eleven-month periods by 45% and 32% respectively.
In addition to the improvement in operating results, net income
has been positively affected by a (non-cash) release of $5.45
million relating to future income tax liabilities. Through
eleven months, the Company had earnings per share of $0.58,
compared to $0.08 in the previous year. Year-to-date cash flow
per share of $1.94 was up 33% from $1.46 recorded in the same
period of last fiscal year. In the current year, the Company
significantly reduced investments and capital expenditures from
the prior year and these expenditures remain well below cash
flows generated from operations.
UGG also announced today that it expects to provide about $9
million after-tax as an unusual item in its year-end accounts to
substantially complete the rationalization of its country
operations. Additionally, UGG will recognize in its year-end
accounts, an unusual non-cash gain related to the partial
settlement of one of its defined benefit plan obligations on
July 31, 2001.
"UGG's balance sheet continues to improve" said Hayward.
"Long-term debt has been reduced and the implementation of the
UGG Financial strategic initiative (with Scotiabank) has
significantly decreased short-term debt requirements compared to
the last fiscal year."
UGG is one of western Canada's largest agribusiness firms.
Founded in 1906, the Winnipeg based company is diversified into
grain merchandising, crop input sales and distribution,
livestock production services and farm business communications.
UGG is publicly traded on the Toronto Stock Exchange under the
symbol ``UGG''. For further information on UGG, contact Company
web sites at www.ugg.com or
www.ugginvestor.com
Company news release
N3695
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