Viterra Reports Q2 Profit

TORONTO - Jun 9/10 - SNS -- Viterra reported net earnings of $18.41 million on sales of $2,048 million for the second quarter ending April 30, down from net earnings of $26.309 million on sales of $1,608 million during the same three month period last year.

This lifted net earnings for the first half of the current fiscal year to $29.063 million on sales of $3,833.9 million, compared to a net loss of $6.641 million on sales of $2,989.8 million during the same six month period last year.

In reporting the results, Viterra noted, "The results for the first six months of fiscal 2010 were higher than the comparable period due to $23.1 million in net earnings from Viterra Australia. In addition, last year Viterra recorded $25.4 million of after-tax negative items ($19.4 million fertilizer inventory write-down and $6.0 million loss on disposal)."

President and Chief Executive Officer, Mayo Schmidt said, "Overall performance in the first half of 2010 has been solid as we prepare ourselves for what is shaping up to be a busy second half of the fiscal year. In Australia, integration is on track. Operationally, we have recently seen demand through our shipping system increase steadily and have experienced heavy movement through the month of May, which we expect will continue into June. From a spring seeding perspective, South Australia has had good moisture with widespread rain in late May, providing an excellent start for seeding in that region.

"In our North America operation, we are on track for solid grain movement for the remainder of the year. Some farmers have had challenges with excessive wet weather recently, particularly in the Northeast part of Saskatchewan. We are supporting them by positioning our people, resources and early maturing agri-products in an effort to maximize seeded acreage over the next two weeks."

Viterra’s second quarter North American grain shipments were 4.0 million metric tons (MT) compared to 4.6 million MT for the same period in 2009 bringing the year-to-date total to 7.6 million MT, down slightly from 8.4 million MT shipped in the first six months of 2009 when the industry experienced record grain production. North American margins on a quarterly and year-to-date basis were in line with management’s expectations, down slightly due to the shipments variance and the impact of lower commodity prices on the value of cleaning and blending revenues.

Grain shipments for Viterra Australia were 1.2 million MT in the quarter, bringing the year-to-date total to 1.9 million MT. Viterra shipped approximately 35% of that volume for its own account. Margins in that business were lower than expectations due to the impact of slower than normal movement in the first half of 2010 on merchandising and handling charges.

Mayo Schmidt added, “We are in a position of strength for Fiscal 2011 given the initial outlook for healthy crop production around the world. As a significant owner of key grain handling and marketing assets in both hemispheres, volume is a key driver in Viterra’s ability to maximize efficiencies and earnings. From an agri-products perspective, we expect demand to remain strong next year as producers look to increase yields. Profitability in this segment will depend somewhat on commodity pricing levels, particularly for fertilizer, which we believe, consistent with industry views, will strengthen with the growth for food and food ingredients around the world.

"Finally, with the expansion of Viterra’s processing capabilities and the integration efforts that we are undertaking to ensure operational excellence in all aspects of our business, we remain firmly focused on delivering strong financial performance and increased shareholder value."

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