Tax expenses affecting income trusts and a narrower margin due to renovation at its highest-margin business weighed on Winnipeg grain handling equipment firm Ag Growth’s net earnings for 2007.
And the company said it plans to boost its margin in 2008 with further price increases on some of its products this year, over and above those it announced Jan. 1.
The income fund on Monday posted net earnings of $12.4 million on $130.7 million in sales in the year ending Dec. 31, down from $21.9 million in net earnings on $81.5 million in sales during 2006.
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However, “excluding non-cash future tax expenses related to legislation impacting the taxation of income trusts, net earnings for (2007) were $21.9 million,” the company wrote in its release.
Demand for both portable and stationary grain handling equipment from Ag Growth’s assorted divisions “increased significantly” with the worldwide increase in crop demand and low crop inventories, the company said.
Offsetting those revenues were costs due to a “capacity improvement initiative” at auger maker Westfield Industries of Rosenort, Man., which the company described as its “highest margin” division. Appreciation of the Canadian dollar, higher corporate expenses and the costs of integrating the product line of Calgary grain bin maker Twister also weighed on the results.
Against that, however, another division, grain conveyor maker Hi Roller of Sioux Falls, S.D., had “its best year on record” in taking advantage of positive market conditions.
“Although our capacity issues have continued into the first quarter of 2008, the capacity projects initiated in 2007 are approaching fruition,” CEO Rob Stenson said in the company’s release.
“We expect margin pressures to ease as we get further into 2008 due to the benefit of the capacity projects, a price increase implemented on Jan. 1, 2008, and the anticipation of additional price increases in 2008.”
Ag Growth’s other divisions include grain belt conveyor maker Batco Manufacturing of Swift Current, Sask., grain dryer maker the Edwards Group of Lethbridge, Alta., and auger maker Wheatheart Manufacturing of Saskatoon.
