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Viterra faces loss in first quarter on fertilizer write down

Canada's largest grain handler, Viterra, posted its first loss in five quarters as it wrote down the value of its fertilizer inventory.

Consolidated sales and other operating revenues for the first quarter of fiscal 2009 increased C$64.6 million to C$1.4 billion (2008 - C$1.3 billion), with sales increases reported in the Agri-products, Agri-food Processing, Livestock Feed and Services, and Financial Products segments.
 
EBITDA (consolidated earnings before interest, taxes, amortization, gain (loss) on disposal of assets, integration expenses) was a loss of C$6.4 million for the quarter, which included a fertilizer inventory write down of C$28.1 million.
 
Excluding the write down, consolidated EBITDA was C$21.7 million, which compares to C$81.3 million in the same quarter of 2008.
 
A decision by farmers to defer fertilizer purchases to the spring and lower fertilizer margins, together with the impact of a decline in grain margins and volumes in the first quarter were the main reasons for the variance.
 
Viterra's first quarter net loss was C$33.0 million, which compares to net earnings of C$41.2 million in same three-month period of 2008. Excluding the fertilizer inventory write down, Viterra's net loss for the quarter was C$13.6 million
 
Slow start
"It is not unusual to record an operating loss in the first quarter, particularly if fall fertilizer applications do not materialize", said President and Chief Executive Officer, Mayo Schmidt.
 
"Even with the slow start this year, we expect a solid financial year in 2009. Farmers are now working closely with us to make sure they are positioned with the right products to plant a profitable crop in the spring.
 
“As such, we anticipate good demand for our agri-products and service offerings, particularly in our third quarter, which is the period in which we generate the bulk of our earnings."
 
Viterra's grain shipments for the quarter ended January 31, 2009 were 3.8 million tonnes. This compares to 4.2 million tonnes for the comparable period in 2008.
 
In Viterra's Agri-products segment, sales and other operating revenues were C$186.2 million compared to C$166.0 million for the same three-month period of 2008, reflecting sales improvements in seed, crop protection products and equipment.
 
Feed performs well
The Livestock Feed and Services segment generated sales of C$193.7 million for the three months ended January 31, 2009 which compares to C$119.2 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.
 
Details of the financial quarter report are available on Viterra's website, under Newsroom www.viterra.ca
 

Dick Ziggers

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