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Ridley Inc.: strong growth in 3rd quarter

Canadian feed maker Ridley Inc. reported its financial results for its fiscal 2008 third quarter ended March 31, 2008. Earnings rose to $11.0 million compared to $6.8 million in the same period last year. At the same time, the company is selling its North American assets.

Earnings are before interest, taxes, amortization and asset impairment loss (EBITA). Ridley reported net earnings of $5.0 million after income taxes in the third quarter of fiscal 2008 compared to net earnings of $3.1 million for the same period last year.

"Ridley's net earnings growth of 65% in the third quarter of fiscal 2008 was an encouraging result because it was a product of generally strong earnings across all of our divisions under increasingly challenging market conditions", reported Steve VanRoekel, President and CEO of Ridley Inc.

"Gross profits improved by 25% over the same period last year, largely as a result of strong volumes in our US businesses, which benefited from an exceptionally cold winter season in contrast to last year, good margins and well managed operating costs. This led to an increase in third quarter EBITA over last year of 62% for Ridley as a whole", added VanRoekel.

Pig sector under pressure
While North American grain producers are enjoying record prices, these same conditions are pressuring all livestock and poultry producers, especially the pig sector, which has experienced recent record or near-record losses.

In particular, the Canadian swine industry is already well into a significant herd reduction, the first period of negative growth in more than a decade. As a result, in the first and second quarters of fiscal 2008 Ridley initiated a restructuring in its Canadian operations to reduce operating costs.

Ridley earlier reported the rationalization of manufacturing facilities in Lethbridge, Alberta and Winnipeg, Manitoba as a part of that plan. The restructuring plan was successfully completed by the end of December and led to a significant improvement in Canadian earnings in the third quarter.
In March of this year Ridley acquired the feed supplement block manufacturing business of Ultralyx and 4 Seasons Marketing, LLC located in Flemingsburg, Kentucky.

The acquisition expanded RNS's block product lines into a new category featuring the use of ethanol co-products, and enabled the company to consolidate production from their Syracuse, Indiana plant to generate cost synergies. The Syracuse facility was subsequently closed in early April.

Sell off North American feed mills
Headquartered in Mankato, Minnesota and Winnipeg, Manitoba Ridley Inc. is a publicly traded company on the Toronto Stock Exchange. But Ridley Corporation Limited of Australia owns the majority of the shares in Ridley Inc., with the remaining held by a variety of institutions and individuals. Ridley Corp. itself operates feed and salt businesses in Australia, with headquarters in Sydney, New South Wales. Now the Canadian branch is looking for a buyer, its chairman said on Wednesday, after its Australian parent Ridley Corp said it wants to sell its stake. "We've contacted people who we think might be interested, but this is a public company, so there's any number of things that could happen," Brian Hayward said in an interview.

Australian feed maker Ridley Corp, which built its North American business through a series of acquisitions during the past 15 years, said that, for the right price, it would bow out of the race to consolidate the feed industry. "It is difficult for Ridley Corp to support and facilitate the pursuit of these opportunities in a funding and strategic sense," the company said in a release. The Australian feed maker owns 69% of the North American company.

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