Viterra Earnings Jump

REGINA - Jun 11/08 - SNS -- Viterra reported net earnings of CDN $33.563 million on sales of $1,525.377 million during the second quarter ending April 30, compared to a net of $9.183 million on sales of $401.46 million during the same three month period last year.

This lifted net earnings for the first half of the current fiscal year to $74.78 million on sales of $2,842.519 million, compared to a net of $17.118 million on sales of $849.083 million the first six months of the previous fiscal year.

The jump in revenue and earnings reflects the impact of the merger with Agricore United as well as the effect of strong commodity prices on gross sales revenue.

Viterra notes its purchase of Agricore United boosted its grain handling capacity from 1.1 million to 1.8 million metric tons (MT). "As a result, for the second quarter of fiscal 2008, Viterra shipped 3.4 million MT of grains and oilseeds from primary elevators, compared to 1.9 million MT in the same quarter of 2007, an increase of about 80.1%," the company said in its quarterly statement.

However, a rising handle and higher average commodity prices have had an impact on the credit facilities needed by Viterra and all grain companies.

Viterra stressed, "With higher commodity prices, the marketplace has had to adapt to significantly higher working capital financing costs. For example, canola prices have risen to $623.10 MT at April 30, 2008 compared to $392.80 MT at the same time in 2007. The resulting $230.30 MT increase in commodity values, assuming a 7% financing charge, requires an additional spread of $1.34 MT per month. Additional margins earned to cover these costs are included in the segment results, however the additional interest costs are only reflected at the consolidated level as part of Viterra’s overall financing expenses."

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