First-quarter profits are up for feed maker Ridley Inc., but no thanks to its feed operations, which took nearly a 10 per cent drop in sales from the same time last year.
The feed company, with headquarters in Winnipeg and in Minnesota, posted net earnings of $2.93 million on $169.3 million in revenue in its quarter ending Sept. 30, up from $2.59 million on $139.8 million in its year-earlier Q1.
Lower volumes in the Canadian and U.S. business units of Ridley’s feed operations division speak to “increasingly conservative attitudes and feeding practices by livestock and poultry producers after more than two years of exceptionally high feed prices and, in the case of Canada, further reductions in the size of the Canadian swine herd,” the company wrote.
“Production agriculture is more recession-proof than most industries, but while we’re insulated, we’re not isolated,” Ridley CEO Steve VanRoekel said in the company’s release Tuesday.
“The recent sharp declines in feed prices will take pressure off producers’ working capital demands and break-evens; however, the turmoil in financial markets, stronger U.S. dollar, and the threat of a global economic recession have created enough demand uncertainty for meat, milk, and egg products that we expect livestock and poultry producers to remain extremely cautious for the near-term future.”
But the company’s diversified business units should help cushion the impact on its overall performance, VanRoekel said.
For example, in terms of gross profit, its nutrition services division “rebounded” this year from an improved sales mix of higher-margin products that had been hampered last year by unfavourable weather and poor pasture conditions in key cattle markets in the U.S., the company said. That division includes Ridley’s feed supplement block and horse nutrition businesses.
And gross profit in Ridley’s feed ingredients division, which includes products such as vitamins and trace mineral premixes, is benefiting from “favourable inventory positions in key feed commodities that have risen in cost over the several months.”
Ridley’s feed and supplement brands include Feed-Rite, Hubbard, Ridley and Sweetlix and are marketed across North America.