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BSE settlement reason for Q2 loss Ridley

Ridley reported a net earnings loss of US$2.8 million after income taxes for the second quarter ending Dec 31, 2007 due to a CAN$ 6 million settlement in a class action lawsuit.

For the three months ended December 31, 2007, earnings before interest, taxes, amortization and asset impairment loss (EBITA(i)) for continuing operations, were $8.5 million compared to $10.1 million last year.

Ridley previously announced that, on February 5, 2008, it had reached a settlement agreement with the plaintiffs in the BSE class action lawsuits filed against Ridley and the Government of Canada in four provinces of Canada.
Under the settlement agreement, Ridley will pay CAD$6 million into a plaintiffs' settlement trust fund and will effectively cap its exposure to the claims made by the plaintiffs to the CAD$6 million. The net earnings loss in the second quarter of fiscal 2008 reflects the $6.0 million claim settlement expense.

Restructuring costs
EBITA in the second quarter includes a one-time charge of $1.4 million taken for the restructuring of Canadian operations, implemented in November. These expenses should pay back in the next quarter through lower operating expenses.

Excluding those one-time costs for restructuring Ridley's EBITA in the second quarter would have been equivalent to the same period as last year.

Drought problems impact US results
"After allowing for the class action claim settlement, Ridley performed well in the second quarter despite an increasingly difficult livestock production economy, thanks largely to good results from the US side of Ridley Feed Operations and a strong earnings increase from Ridley Feed Ingredients", reported Steve VanRoekel, President and CEO of Ridley Inc.

"Gross profit results from our US-based Ridley Nutritional Solutions were close to last year, but continue to be below expectations, due primarily to the exceptional drought and poor pasture conditions in the south-eastern US that continue to depress block supplement volumes.

High prices hurt Canadian profits
"Earnings results in the second quarter of fiscal 2008 on the Canadian side of Ridley Feed Operations were impacted by the severe strains that beef and hog producers on the Prairies are feeling from historically high feed prices and the strong Canadian dollar," added VanRoekel.

"Looking ahead, we are obviously concerned about the effect that historically high feed prices are having on our customer base. The potential for sustained high prices and continuing volatility creates an uncertain environment for the entire food industry."

Related news:
Animal feed maker settles in BSE case   
Judge allows class action over BSE  

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