For the first three months of fiscal 2010, Canada based Ridley Inc. earned $1.1 million after income taxes compared to $2.9 million (-62%) last year.
Earnings before interest, taxes and amortization (EBITA) for the first quarter of fiscal 2010 were $4.4 million compared to $7.0 million last year.
"These results reflect, for the third consecutive quarter, reduced market demand for animal feed products resulting from poor economic conditions for many livestock and poultry segments across Canada and the United States", said Steve VanRoekel, President and CEO of Ridley Inc.
"While the current downturn has been severe, we recognize that meat, milk and egg production moves in cycles of profit and loss. We expect that ongoing herd and flock size reductions will eventually restore producer profitability and strengthen demand for animal feed products", added VanRoekel.
Reduced sales tonnage
Ridley's performance in the first quarter of fiscal 2010 continues to be adversely affected by reduced sales tonnage volumes across each of the operating divisions.
Ridley Feed Operations (RFO), which markets complete feeds, supplements and premixes to core cattle, swine and poultry production markets in the United States and Canada accounted for most of the decline in volume.
Demand for livestock feed continues to be significantly affected by poor livestock and poultry producer economics, largely a result of relatively high feed prices and weak demand for meat and milk products and reduced food exports from North America.
Ridley Nutrition Solutions (RNS) and Ridley Feed Ingredients (RFI) also recorded lower operating income this quarter compared to last year, partly as a result of the difficult livestock economy, but also due to the absence of gains from favourable inventory positions that enhanced income last year when raw material prices were increasing significantly.
The negative impact of poor market conditions on Ridley's final results was lessened by overhead cost reductions initiated in the latter half of last year.
Volatile raw material market
The external drivers of Ridley's commercial feed business are strongly influenced by the economic dynamics of the North American livestock and poultry production industry.
Ridley recorded exceptional results last year as gross profit margins benefited from favourable ingredient positions in generally rising and volatile commodity markets.
This year, raw material costs have eased, feed prices have followed those costs downward and there are fewer gains to be realized in ingredient positions.
Lower gross profits this year were partly mitigated by significant overhead cost reductions that were initiated in the last half of the prior year, which contributed to operating expenses that were lower this year by $2.8 million compared to last year.
Volumes were lower in each of Ridley's divisions with the most significant effect concentrated in the traditional feed businesses of Ridley Feed Operations (RFO) in Canada and the United States.
Earnings in the more specialized divisions of Ridley Nutrition Solutions (RNS) and Ridley Feed Ingredients (RFI) were down due to lower volumes and less favourable ingredient positions.
In the first quarter of this year, Ridley initiated two important new business development projects. Construction work began this summer on a major expansion of manufacturing and warehouse space at RFI's vitamin-mineral premix facility in Mendota, Illinois.
Ridley also acquired the manufacturing equipment and product brands of Golden Lyk LLC, a manufacturer of innovative forms of livestock feed blocks that will expand the RNS product offering to existing customers in the upper Midwestern states.