Vicwest Income Fund, owners of Winnipeg-based grain bin manufacturer Westeel, posted a record quarter based partly on “record output” from its ag storage business.
The Oakville, Ont. income trust on Wednesday posted $16.3 million in net income on “record” revenues of $126.38 million for its quarter ending Sept. 30, up from $11 million on $101.05 million in the year-earlier period.
“Through the implementation of lean and flexible manufacturing principles, we achieved record output from our agricultural storage segment,” CEO Colin Osborne said in Wednesday’s release, “and with effective material management and disciplined marketing initiatives we positively impacted the margin in our building construction products segment.”
The impacts of increased revenue and gross margins “more than offset” increased selling, general and administrative expenses, resulting in higher earnings before interest, taxes, depreciation and amortization (EBITDA), the company said.
Gross profit and gross margin improved from the 2007 Q3 due to an “effective material management, selling price discipline in the face of rapidly rising steel costs, favourable product mix and productivity gains,” the company said.
Looking ahead, “while the rapid deterioration in global equity, debt and commodity markets has shaken investor and consumer confidence, (Vicwest) does not expect a significant disruption to its business model or operations in the near term as backlogs and quoting remain positive,” the company said.
Vicwest said it also expects to see “continuing momentum” in ag storage markets. “Despite commodity price fluctuations and corrections in recent months, the agricultural industry, worldwide, continues with positive expectations for the industry, and growing international demand for more sophisticated foodstuffs should lend themselves to strong demand for farm infrastructure, both domestically and internationally,” the company said.
The company said it also expects steel costs to soften as overall steel demand declines, which Vicwest said will restrict its ability to procure steel ahead of price increases, an activity it said it “benefited from” during 2008.