Expansion costs bit off more than a 25 per cent jump in sales could cover in the first quarter for Winnipeg grain handling equipment maker Ag Growth.
The income trust on Friday reported $1.89 million in net earnings on $35.4 million in sales for its Q1 ending March 31, compared to $5.62 million on $28.2 million in the year-earlier period.
Ag Growth’s Canadian holdings include grain auger makers Westfield and Wheatheart; conveyor belt maker Batco; grain bin manufacturer Twister Pipe; and the Edwards Group, a grain dryer company. Its U.S. holdings include the HiRoller conveyor belt line, grain storage manufacturer Union Iron and livestock equipment maker Applegate Steel.
One-time costs in the quarter included integration of the Twister product line, as well as capacity improvements at Westfield, based at Rosenort, Man. Twister’s integration continued into Q2, the company said, but the capacity expansion at Westfield was finished in March and has increased production significantly.
Ag Growth CEO Rob Stenson said the company has also posted several price increases for its products so far in 2008 due to rising prices for steel, and is “confident in our ability to pass through further cost increases as warranted.”
Ag Growth’s order backlogs overall are at record levels, the company said, citing high demand for portable and stationary grain handling equipment due to high commodity prices, larger crops and increased on-farm storage.
The company has also moved some of its other product lines’ production to its plant in Indiana to better service the U.S. market and to take advantage of a relatively large pool of available labour, compared to those for its companies in Western Canada.