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Merger boosts Viterra’s Q3 ledger

Strong ag industry fundamentals have put a shine on Viterra’s third-quarter financial results as Canada’s largest grain company passes its first fiscal wedding anniversary.

Viterra, which formed in late May 2007 from the merger of top Prairie grain handlers Saskatchewan Wheat Pool and Agricore United (AU), on Wednesday posted net earnings of $166.7 million on $2.22 billion in revenues for its third quarter ending July 31.

That’s up substantially from $98.5 million on $1.4 billion in Viterra’s 2007 Q3, but under generally accepted accounting principles for such mergers, that year-earlier period only includes data on AU’s operations from May 29 to July 31, 2007, making for a less-than-direct comparison.

Nevertheless, the Regina-based company reported that increased market share and stronger margins helped improve its grain handling earnings, while higher prices and volumes in fertilizers and increased sales in seed and other crop inputs boosted the bottom line in its agri-products business.

“Our third quarter and year-to-date results are a testament to our ability to maximize operational performance during a period of strong agricultural industry fundamentals,” Viterra CEO Mayo Schmidt said in a release Wednesday.

“We continue to realize the synergies from the AU acquisition ahead of schedule and have created a stable and diverse platform to enable us to execute on acquisitions and market opportunities.”

In its latest Q3, Viterra raised $441.5 million from a major common share offering and secured a $400 million, five-year term credit facility for “general corporate purposes,” including funding for future acquisitions.

Schmidt said the ag industry environment is “presently robust, presenting Viterra with opportunities to grow its business and drive additional value to shareholders.

“We are being aggressive yet selective in our process, applying rigorous strategic and financial metrics to each significant opportunity.”

Viterra reported that as of July 31, its “total synergies” from the merger of SaskPool’s and AU’s operations have reached $87.3 million. The integration of Viterra’s agri-products network is complete, the company said, and that business unit has “exceeded its estimates through the realization of additional revenue generating opportunities.”

Thus, the company said, it now expects “gross synergies” of $104 million from the deal, with the “full benefit to be delivered by the middle of fiscal 2009.”

Now hiring

The company told CBC in Regina Wednesday that its growth has led it to post jobs for permanent as well as temporary workers. As CBC noted Wednesday, those postings haven’t gone unnoticed by members of the Grain Services Union, which represents employees who have been picketing the company’s head office since July.

Some of the postings, CBC reported, are for jobs “identical” to those of staff members now picketing.

The company told CBC the new permanent jobs are part of its normal hiring process, but the GSU claims any new employees hired to do unionized work will have to join their co-workers on the picket line.

The labour dispute between the GSU and Viterra, which affects GSU members at its head office and at its elevators in Saskatchewan, had been confined to the Regina head office until recently, with additional pickets set up at Viterra facilities at Balgonie, Moose Jaw and Shaunavon, CBC reported.

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