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Australian shipments boost Viterra profit

Grain handler Viterra Inc. says second-quarter profits grew to $33.1 million helped by a strong revenue boost across its operations, but the results widely missed analyst expectations.

The Canadian Press/John Woods/The Canadian Press/John Woods

Viterra Inc reported an 80 per cent rise in quarterly profit on Thursday, bolstered by brisk South Australian crop shipments.

Canada's biggest grain handler said record-high shipments from South Australia boosted earnings even as wet weather delayed planting in Western Canada and hurt sales of farm products such as seed and chemicals.

But Viterra's quarterly earnings per share of 9 cents came in sharply below the average analyst estimate of 17 cents, and the stock slipped before turning higher. Viterra shares were up 10 cents or 0.9 per cent at $11.05 on the Toronto Stock Exchange by mid-afternoon.

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"Overall, I am not too disappointed," said Jason Zandberg, an analyst at PI Financial Corp. "The seeding business is just delayed, hopefully, and should show up next quarter."

Expectations are high for the former farmer co-operative as it digests acquisitions in Australia and the United States amid relatively high crop prices.

The company posted its second-biggest annual profit last year and stands to gain from Canada's plans to scrap the Canadian Wheat Board's grain monopoly next year, CEO Mayo Schmidt said in a conference call with analysts.

The impact of the marketing change on earnings should start as soon as the monopoly ends in August 2012, said chief operating officer Fran Malecha.

Grain prices have been high, but volatile this year, with the Japan earthquake and Middle East unrest buffeting prices and leaving the company with a small quarterly loss in its segment that markets and moves products.

Viterra's Australia crop-handling network of elevators and port terminals, acquired in 2009, has given the company a hedge against weather-related crop problems in Canada.

With significant crop still in storage, Viterra said it expects South Australia shipments to remain strong this year.

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In Canada, it has seen steady fertilizer sales even with higher prices and delayed seeding.

Canadian farmers will likely plant 17-18.5-million acres of canola, Viterra said. Planting lags most in flooded Manitoba, where seeding is only 45 per cent complete as of Sunday.

In South Australia, planting is also underway and expected to cover more land this year.

Net profit rose to $33.1-million, or 9 cents a share, for the second quarter ended on April 30, from $18.4-million, or 5 cents, a year earlier.

Revenue rose 33 per cent to $2.70-billion.

Analysts had expected earnings of 17 cents a share and revenue of $2.3-billion, according to Thomson Reuters I/B/E/S.

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Analyst Tasneem Azim of UBS said in a note that the lower than expected earnings per share were due to weak farm product sales and lower margins on processed food and animal feed.

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