Australian operations boost Viterra’s year-end

Expanding Down Under has boosted the bottom line for grain handler Viterra in fiscal 2010.

Canada’s largest grain handler, which bought Australia’s ABB Grain in September 2009, on Wednesday booked its first full fiscal year including the Adelaide-based grain firm’s revenues and expenses.

Viterra reported profit of $145.27 million on $8.256 billion in revenues for its year ending Oct. 31, up 28 per cent from $113.13 million on $6.632 billion in fiscal 2009.

The Regina-based grain firm credited its Australian operations for $2.3 billion of its 2010 revenues, on top of revenue from its recent purchases in U.S. food processing.

Those increases, the company said, were “partially offset” by lower volumes and commodity prices in Viterra’s North American grain handling business.

The company’s 2010 earnings before income, taxes, depreciation and amortization (EBITDA) on grain handling and marketing thus rose to $386.1 million — up from $247.9 million in 2009, which included just five weeks of ABB’s handling results.

EBITDA from the agri-products division, including crop inputs and ag retail operations, was up at $153.8 million from $132.3 million in 2009, while Viterra’s processing arm booked 2010 EBITDA of $104.3 million, up from $36.5 million in 2009.

The company’s new forays into processing included its takeover this spring of Dakota Growers Pasta Co. at Carrington, N.D., and of 21st Century Grain Processing of South Sioux City, Neb.

“These new pasta and oat processing businesses are highly accretive and provide Viterra with stable predictable earnings, which we expect to generate higher returns for shareholders,” Viterra CEO Mayo Schmidt said Wednesday.

Looking at the broader grain industry, Schmidt noted flooding in parts of Australia, droughts in Argentina and potentially damaging frosts in Europe have “tightened supply and pushed commodity prices up, allowing them to return from the soft pricing environment experienced during the last two years.”

With ABB on board, he said, Viterra is “ideally situated with a strong leadership position in origination from both North America and South Australia. In fact, South Australia is currently harvesting what is expected to be a record-setting crop.”

International profit

Looking ahead into 2011, Viterra’s management now estimates its global pipeline margin per tonne for fiscal 2011 will be in the range of $33 to $36 per tonne, up from its guidance of $30 to $33 per tonne in 2010.

That increase, the company said, will reflect a full year of gross profit expected from the company’s International Grain group, now “fully established” including new trading offices in Italy and Ukraine.

However, the Canadian Press news agency noted in a report Wednesday, Viterra’s chief operating officer Fran Malecha was quoted on the company’s conference call as saying the company will also increase its storage and handling fees in 2011, both in Canada and in Australia.

Viterra said it expects Canadian Grain Commission receipts for the six major grains in Western Canada in fiscal 2011 to be in the 30 million-tonne range for fiscal 2011, down from the “typically available” 32 million tonnes.

The company noted its 2011 estimate includes some drawdown of carryover stocks as strong demand and prices entice Prairie grain growers to ship grain from their bins.

In South Australia, meanwhile, Viterra said it expects shipments to continue with momentum in fiscal 2011, given the “production issues” in other grain growing nations as well as improved commodity pricing.

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