Viterra sees profits fall on back of commodity price declines
Food ingredients firm Viterra has reported a 39% drop in profit in 2008, as lower commodity prices hurt margins. Higher volumes of grains and oilseeds sold, however, ensured revenue was close to the record performance of the year prior (-2.9%).
The Canadian firm, which is also listed on the ASX, said the full year results reflected “record grain shipments, a leveling of gross margins per tonne and the impact on contributions from a significant decline in fertilizer margins”.
“Fiscal 2009 was a defining year for Viterra, one in which we significantly broadened our global presence through the acquisition of ABB Grain Ltd in Australia,”
Mayo Schmidt, President and Chief Executive Officer, told investors. “We executed a $1.4 billion transaction and, as promised, retained a very strong capital structure with over $1 billion of cash and short-term investments on our balance sheet. Approximately $800 million is available for future growth initiatives.”
The company is bullish about the future of their Australian operations, with growing conditions strong in a number of regions.
Total grain production in Australia is currently forecast to be 36.3 million metric tonnes, with approximately 7.5 million tonnes being produced in South Australia.
“This represents an increase of 40% over the five-year average,” Viterra said in a statement. “As such, management currently expects receivals in the 6.5 to 7.0 million metric tonne range, an increase of 51% against the historical five-year average.
“As of mid- January, 2010, Viterra’s Australian operation had already received approximately 6.3 million metric tonnes of grains and oilseeds into its system.”
Looking forward, CEO Mayo Schmidt said the agribusiness firm was confident of a more profitable 2010, led by growth in Australia.
“As we look ahead to Fiscal 2010, we are very optimistic that we will see a solid recovery in the Australian business,” Schmidt advised. “Receivals to date have already exceeded expectations. With our proven integration expertise, we are confident that shareholders will benefit from estimated gross synergies of approximately $30 million, with the full annualized benefit to be delivered in fiscal 2012.
“Given the increasing importance of high quality food ingredients, we expect considerable opportunities to generate additional value for our stakeholders, particularly in the value-added sector.”
