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Viterra posts $33M profit in Q2

Last year’s merger of grain handlers Saskatchewan Wheat Pool and Agricore United continues to add extra figures on the bottom line for the merged company, Viterra.

The Regina company on Wednesday posted net earnings of $33.6 million on revenue of $1.53 billion for its second quarter (Q2) ending April 30.

Officially, that’s up from net earnings of $9.2 million on $401.4 million in Q2 revenue in 2007, but Viterra’s 2007 numbers include only SaskPool’s pre-merger earnings, not Agricore United’s.

Grain shipments and margins increased over the year-earlier period, the company said, with “improved merchandising opportunities” and boosts in operating efficiency increasing grain margins 63.2 per cent to $35.12 per tonne.

Not surprisingly, the company’s expanded retail network led to stronger Q2 sales in the firm’s agri-products division, but those results were “also impacted by higher fertilizer sales and prices,” the company wrote.

However, “despite higher sales in this segment, second quarter results were below expectations due to cooler weather in April 2008, which delayed the timing of many of the company’s crop input sales into the third quarter.”

The company’s outlook for its livestock feed and services operations, on the other hand, points to higher feed ingredient costs, which in turn will contribute to higher feed prices. “This may further exacerbate the strain on livestock producers (hog producers in particular) and negatively affect the operations of the livestock feed and services segment through the remainder of 2008,” the company wrote.

Viterra said it could also incur “additional write-offs” in the latter half of this year if poor hog market conditions continue. The company said it “continues to monitor” its investment in hog production and animal feed company Puratone, based at Niverville, Man., as well as its portfolio of accounts with hog producers.

Labour relations

Viterra’s report also noted this week’s turn for the worse in contract talks with the Grain Services Union (GSU), which represents some of its head office staff in Regina, maintenance and operations workers in Saskatchewan and staff at its former AgPro Grain elevators in Alberta and Manitoba.

If the company and union can’t reach an agreement, Viterra said the earliest date for a strike or lockout would be July 2, although the union has pledged not to strike until July 7 if a deal isn’t reached.

Viterra has previously said it has plans in place to continue operations if some of its staff end up striking or locked out, but said in its Q2 report Wednesday that “any labour difficulties would be disruptive to the corporation’s operations and could have an adverse impact on its financial results.”

The company last July applied to the Canadian Industrial Relations board to combine the various groups of GSU employees into one bargaining unit. The company said hearings on the matter were held in March, with more hearings scheduled.

“If the Canadian Industrial Relations Board agrees with the corporation’s one-unit application, it may order the employees to vote as to whether they want to be represented by the GSU or not,” Viterra wrote Wednesday. “The end result may be that the GSU no longer represents the employees of Viterra.”

Cash for shopping

Viterra again noted that in its Q2 it raised $460.5 million, gross, from a new common share offering, for “general corporate purposes, including the funding of potental future acquisitions.”

The company’s acquisitions during its Q2 included Oklahoma feed milling company Sunrise Feed, feed and farm supply company V-S Feed and Agri-Supplies of Ponoka, Alta., and Gore Bros., a feed milling company with operations in Texas and New Mexico.

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