Agricore Quarterly Loss Narrows

WINNIPEG - Mar 2/07 - SNS -- Agricore United reported a loss of CDN $14.916 million on sales of $709.7 million for the first quarter ending January 31, compared to a loss of $20.589 million on sales of $706.4 million during the same three month period last year.

In releasing its latest quarterly results, the company revealed that its share of western Canada's grain handle was down compared to the same period last year. While shipments from primary elevators were up around 120,000 metric tons (MT) at 2.823 million MT, market share dropped from 34.3% to 32.4%. For the twelve months ending in January, Agricore's market share slipped from 33.6% the previous year to 33.1%.

Average grain margin per tonne increased to CDN $20.81 for the quarter compared to $20.12 in 2006. At the same time, grain handling expenses decreased by over $3 million or 8.2%, due mainly to improvements in operating efficiencies. The company's grain inventory turn factor for the first quarter of 2007 was 9.0 times, better than the industry average of 6.7 times.

Crop Production Services (CPS) sales also increased slightly for the three month period, from $51.1 million last year to $52.6 million at January 31, 2007, due mainly to higher crop nutrition sales. Crop input sales for this quarter typically represent less than 10% of the company's overall annual sales, with the third quarter representing about 75% of sales. However, deferred sales revenue, which represent prepaid sales not yet delivered to customers, increased to $131.5 million at January 31, 2007, up $36 million from the same time in 2006.

Agricore United's Livestock Services Division also delivered a record first quarter, with feed volumes increasing by 154,000 MT during the quarter to 428,000 MT. Consequently, gross profit and net revenue in this segment increased by more than 43% to $20.8 million.

The acquisition of Hi-Pro Feeds contributed $7.3 million to the gross profit of the livestock segment in the most recent quarter. With additional operating expenses associated with the Hi-Pro acquisition, overall segment EBITDA was $7.5 million for the segment, an improvement of over 40% from the same period last year.

Gross profit and net revenue also increased by $74,000 in Agricore United's Financial Markets segment during the quarter. The company's PRISM program introduced in 2006, which offers producers a bundled product offering with a risk management component, contributed $110,000 to the segment in the most recent quarter and is being offered again to producers for the 2007 growing season.