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Company update: Ridley Inc. Q1

Canada and US based Ridley reported its financial results for the first quarter of fiscal 2013, the three months ended September 30, 2012.

For the first three months of fiscal 2013,. earnings before interest, taxes, depreciation and amortisation (EBITDA) of Canada and US-based Ridley were up US$10.2 million compared to $3.8 million last year.

Net profit after income taxes (NPAT) was $5.3 million compared to $0.7 million last year.

“Our earnings results for this quarter are clearly satisfying, but we note that these were the result of exceptional circumstances impacting commodity prices and forage availability largely brought about by the severe drought in the United States,” said Steve VanRoekel, President and CEO of Ridley.

“We remain concerned for our customers, livestock and poultry producers, whose operations are being stressed by high commodity prices and increased costs from replacing normal forage sources with commercial feed supplements.”

“While Ridley is well positioned to respond to market dynamics, we are also aware that these are unusual conditions. Eventually the effects of the drought, and its positive stimulus to feed demand, will diminish and more normal conditions should return,” added VanRoekel.

Tonnage up
Ridley’s tonnage volumes were 3.9% higher in the first quarter of fiscal 2013 while gross profits increased by 32.5% to $22.5 million from $17.0 million last year. 

Sales revenues of $174.3 million were 11.4% higher than last year but the major part of this increase was the effect of higher raw material costs on selling prices. 

The increase in Ridley’s gross profits this quarter reflects volume growth, partly the effect of the drought on demand for feed and forage supplementation, and inventory gains realized from sharply higher prices in the last several months for commodities and other feed ingredients.

Operating costs down
Net operating expenses decreased by $1.2 million on more efficient administrative activities and a reduction in bad debts provisions. Operating expenses last year included a loss on the sale of facilities and overheads related to two facilities that were closed later in the year.

US Feed Operations (USFO) and Ridley Block Operations (RBO) produced strong results in the first quarter of fiscal 2013 on increased volumes of feed supplements and feed blocks in the beef cattle sector and improved unit margins.  

Ridley Feed Ingredients (RFI) reported results in the first quarter that were largely unchanged from last year. 

Canadian Feed Operations (CFO) reported lower volumes in the first quarter because of the temporary closure of a facility in Brandon, Manitoba during a major capital project.

Canadian merger
On October 18, 2012, Ridley announced that it had entered into agreements with Masterfeeds a subsidiary of Omaha-based Ag Processing  (AGP), to merge their respective Canadian animal nutrition businesses into a new limited partnership entity that will operate as Masterfeeds LP, headquartered in London, Ontario. 

Each of Masterfeeds and Ridley will contribute essentially all of their Canadian feed operating assets in exchange for relative shareholdings in Masterfeeds LP.

Completion of the merger is expected in the second quarter of Ridley’s fiscal 2013 and is subject to the execution of definitive agreements and normal conditions including regulatory approvals.


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