CALGARY, ALBERTA, CANADA — Viterra Inc. announced on June 12 that its net earnings for the second quarter of 2012 have more than doubled to C$67 million (C$0.18 per share) compared to C$30 million (C$0.08 per share) in the same three-month period last year. The company’s EBITDA was a record C$185 million for the quarter, an improvement of 43% compared to C$129 million in the second quarter of fiscal 2011 as all three business segments reported improvements in the quarter.
"Viterra continues to deliver robust results, demonstrating the strength of the company's integrated business model and dedicated employees around the world," commented Mayo Schmidt, Viterra's president and chief executive officer. "We are very proud of the successful business we have built and the contribution we have made to the industry and the communities in which we operate. Viterra's value has been recognized by our global agricultural peers with the recent acquisition interest and the significant premium being paid by Glencore to acquire the company."
The Grain Handling and Marketing segment’s EBITDA increased 14% to C$141 million compared to the same period last fiscal year. Favorable global agricultural fundamentals supported strong shipping volumes and higher grain handling margins. In Western Canada, shipments increased 17% to 4.3 million tonnes. The year-to-date consolidated global pipeline margin increased to C$35.65 per tonne compared to C$32.79 a year earlier.
The Processing segment's EBITDA improved 33% to C$28 million due to improved pasta and canola contributions. The food processing margin for the second quarter increased to C$100.33 per tonne compared to C$98.96 per tonne last year. This improvement can be attributed to lower raw material costs in the pasta business and additional higher margin specialty oil sales in the canola business.
Viterra’s Agri-Products segment achieved record EBITDA of C$64 million driven by strong fertilizer sales volumes and pricing. Fertilizer margins averaged C$113.51 per tonne for the second quarter of fiscal 2012 compared to C$108.76 per tonne in the prior year. In addition, an early start to spring seeding in Western Canada caused some agri-product sales, which would typically occur in the third quarter, to move into the second quarter.
On a year-to-date consolidated basis, EBITDA was C$374 million compared to C$339 million in the prior year while net earnings were C$145 million (C$0.39 per share) versus C$131 million (C$0.35 per share) in the corresponding period of fiscal 2011.
For the second quarter of fiscal 2012, Viterra generated operating cash flow prior to working capital changes from continuing operations of C$122 million (C$0.33 per share) compared to C$74 million (C$0.20 per share) a year earlier. This increase was mainly attributable to record EBITDA in the second quarter. During the second quarter Viterra generated free cash flow from continuing operations of C$75 million, an increase from C$34 million in the corresponding period of fiscal 2011.
With the vast majority of seeding complete in Western Canada, Viterra said it estimates that total seeded acreage in this region should total approximately 60 million acres in the 2012 season. This exceeds the 55.4 million acres planted in 2011 and would be on par with the historical average. The increase in acreage is primarily due to the return to production of acres, which were affected by excess moisture in the spring of 2011.
According to Statistics Canada, western Canadian canola plantings are also expected to increase by about 10% to 20.3 million acres in the upcoming season, compared to the record 18.7 million acres planted in 2011. The increase is being driven by strong pricing and tight stocks of the oilseed in Western Canada.
In South Australia, Viterra estimates that total seeded acreage should increase by 5% to around 9.8 million acres. Canola acres are expected to increase by approximately 30% to 865,000 acres at the expense of lentils which are estimated to be down by approximately 12%. Seeded barley and wheat acres are expected to increase by approximately 3% to 6%.
Viterra noted that recent rainfall events across Southern Australia have provided favorable moisture conditions for the seeding program and it is estimated that approximately 85% of the crop has been planted.